In the woods behind my home, there is a stone labyrinth modeled after those found in medieval cathedrals such as at Chartres. Often when I feel particularly confused, I go out and walk it. I always know where I’m going, but I never know what I’ll find.
So it is as I plod slowly through the full value tax rate data recently released by Maine Revenue Services: the total dollar value of the property tax commitments made by local officials to fund their 2014 budgets, taken as a percentage of the 2016 state valuation. (See last week’s column for more details.)
To provide some structure, I listed the 490 municipalities by full value tax rate in descending order and – following the model generally used for analyzing income distribution – divided them into groups of 98 (the highest-taxed 20 percent to the lowest-taxed 20 percent).
Scanning the five groups of communities, three patterns emerge:
• First, the size of the tax base is not particularly important in distinguishing among communities. The highest-taxed group does have an average tax base of $411 million. But if Portland (whose tax base exceeds $8 billion) is excluded, the group’s average tax base drops to $331 million.
With this exclusion, the lowest-taxed group has the highest average tax base – $363 million – and the other four groups have average tax bases of $280 million to $330 million. Interestingly, each group includes at least seven communities with a tax base of $900 million or more.
• Second, tax commitment (how much communities spend) is clearly and obviously related to tax rate. The unweighted average tax rate for the highest-taxed 20 percent was $20.73 per $1,000 assessed valuation. This rate fell for each group down to $7.86 per $1,000 for the lowest-taxed group.
• Third, growth in tax base was equally significant in distinguishing among the groups. Between 2006 and 2014, the lowest-taxed 20 percent of communities had an unweighted average increase in state valuation of 48 percent, compared to an increase in state valuation of 25 percent for the highest-taxed group over the same period.
What do all these facts mean in practical terms?
• First, Maine’s traditional urban centers – Portland, Bangor, Lewiston, Biddeford, Brunswick, Auburn, Augusta, Sanford, Bath, Belfast, Brewer, Waterville, Rumford, Presque Isle – struggle with relatively slowly growing tax bases and continuing high levels of demand for services.
• Second, a group of coastal communities (York, Wells, Kennebunkport, Mount Desert, Harpswell, Bar Harbor, Ogunquit, Boothbay) and small plantations (Coplin, Lincoln, Nashville, Magalloway, West Forks and others) have enjoyed rapid increases in property values with little accompanying increase in demand for services.
• Third, a relatively large group of suburban communities – Scarborough, Windham, Cape Elizabeth, Gorham, Falmouth, Kennebunk, Raymond, Buxton, Eliot – have managed both growing demand for services and rising property values in such a way as to keep relative property taxes low compared to other communities and the state average.
• Finally, Portland, on the basis of its size, complexity and importance as an economic growth engine for the state as a whole, must be treated as its own category.
To my mind, the initial conclusion from this brief foray into the structure of our state’s fiscal system is that if we are to address property tax reform in any meaningful way, we must embrace the complexity.
We must resist the simple, one-size-fits-all solution that will both waste money trying to address different problems with a single policy and add to the confusion and conflict that already makes even discussing tax reform so difficult. Instead, we must look to understand more deeply the different characters and needs of our wide variety of local governments and find ways to address the needs of each separately.
Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at:
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