Tax Policy

Protecting Nonprofit Property Tax Exemption

Every legislative session brings challenges to nonprofit property tax exemption. As municipal budgets are squeezed, nonprofit property tax exemptions are scrutinized. MANP lobbies on behalf of the sector to protect current property tax exemption laws and improve them when prudent.

There are several key messages that are essential to our success in defending against attacks on the nonprofit property tax exemption:

Nonprofits earn their property tax exemption

Nonprofits provide valuable services and benefits to their communities and the state as a whole.  They serve primarily the communities in which they are located and are among the critical economic engines of many communities.  We make our communities more desirable places to live and raise a family.  As government at all levels faces fiscal challenges, municipalities look to nonprofits more than ever to help provide essential community services. Because many of these services, if not provided by nonprofits, would fall to the responsibility of the government, nonprofits relieve some of the burden of government.  We earn our property tax exemption.

Nonprofits work for Maine

One in six Maine workers works for a nonprofit. We’re a key partner in keeping Maine’s economy strong. Maine nonprofits contribute approximately $11 billion dollars per year to the economy through wages paid, retail and wholesale purchases and professional service contracts. This group of vibrant nonprofit organizations invests significant financial and organizational resources in their communities and mobilizes over 345,000 volunteers annually – volunteers who donate almost $935 million in time and resources to their communities (see our Adding Up Impact report).

Maine nonprofits are important community partners

Across the state, municipalities and counties provide important services, such as fire and police protection, sanitation services, and general infrastructure, to their communities.  Nonprofits also provide important services, such as job training, housing, mental health services, transportation, conservation, and arts, culture, and other enrichment opportunities, to municipalities.

Many pay some form of property taxes despite earning the exemption

Even though they have earned an exemption, many nonprofits pay some form of property taxes. Some pay current use taxes such as Tree Growth or Open Space. Others choose to pay taxes on some of their buildings. And others choose to make payments in lieu of taxes (PILOTS). These are conversations that happen within each community and are unique to each community.

128th Maine Legislature

The battle over taxing nonprofits continued in the 128th Legislature. During the first session, there were several bills aimed at eliminating the property tax exemption for certain nonprofits. All such efforts were blocked, but a study was inserted into the budget in the final hours of the shutdown to look at land trusts. A broad range of nonprofits would have been affected by these changes, and not just the largest institutions. Go here for our session summary.

The Governor remains focused on targeting nonprofits, particularly land trusts, during the short second session. He distributed this memo to all legislators February 14, 2018. We responded with this letter with an attached legislative history of recent attacks on the property tax exemption. Despite the heavy rhetoric, there’s still no bill this session addressing this issue. Stay tuned!

Resources:

127th Maine Legislature

MANP worked to educate legislators, mobilize nonprofits, and engage the media (see our op-eds here and here), while providing detailed updates to help nonprofits follow the issue. Go here for media coverage in 2015. Our voice were heard! In a major win for the sector, policymakers closed the session without adopting any of the proposals to impose taxes or fees on nonprofits.