Protecting Nonprofit Property Tax Exemption

2015 Property Tax Threat Updates

Below please find updates related to legislative threats to nonprofit property tax exemption. Find full background information and related resources on our Protecting Property Tax Exemption page.

The most recent updates will appear at the top.

Update #14 (June 30, 2015)

All eyes are on the State House, as the legislature reconvenes today to take up yesterday’s veto of the state budget by the governor and attempt to avoid a state government shutdown. Governor LePage’s original budget proposal called for taxing nonprofit property, but thanks to education and advocacy by nonprofits of all sizes and types, legislators did not include nonprofit property taxes or fees in the document they crafted, though they did reverse last session’s work to exclude charitable deductions from a cap on itemized deductions.

Update #13 (June 23, 2015)

Early last Wednesday, legislators passed a state budget, on which Governor LePage made dozens of line item vetoes. The legislature has now overturned all of them, though the Governor will likely now veto the budget package as a whole, sending it back to legislators to override.

In a win for the sector, the budget document, crafted by four legislative leaders behind closed doors, does not include any property taxes or PILOTs for nonprofits.

Update #12 (June 18, 2015)

The Governor has decided to line item veto each amendment in the budget document which was passed by 2/3 majority in the legislature early Tuesday morning. The legislature will have to vote again on each amendment to override the Governor’s line item vetoes. While we do not think that this will compromise the nonprofit sector, anytime that the floor takes up a vote on a piece of legislation, there is always the chance that it can be further amended.

Last night the legislature voted on a joint order to extend the session by 5 days, which will take the session into Wednesday June 24th.  They have the right to take an additional 5 day extension, and it remains to be seen if this will be necessary.

Update #11 (June 17, 2015)

The Legislature passed their leadership budget late last night / early this morning. While the Legislature still works on a few additional  items prior to their adjournment, it is evident that MANP has safely protected the nonprofit sector relative to taxes, however, it also evident that the work MANP had done relative to LD 1664 and charitable giving in the 126th Legislature, has been repealed.

Update #10 (June 8, 2015)

Budget deliberations continued over this past weekend, with the Appropriations Committee voting 7 – 4 in favor of a compromise which was brokered by Senate Republicans and House Democrats. The compromise included maintaining the income tax and decreasing the sales tax from 5.5% to 5%.

The Committee will ultimately release a divided report out of Committee, which will give way to floor debate and possible amendments to each report. While the Appropriations Committee did not include any apparent threats to the Nonprofit sector, such as taxing nonprofits or imposing PILOTS, the House floor debate and possible amendments may include these initiatives.

Yesterday, the Governor introduced a bill to the House floor which would eliminate the income tax, as identified in his initial budget proposal. This bill was defeated in the House yesterday during a roll call vote along party lines.

Governor LePage is considering a 30 day resolution to keep State Government open beyond June 30th if the legislature cannot produce a balanced budget document, although this stop gap type initiative is questionable under Maine’s Constitution.

Again, while it appears that threats to the nonprofit sector have been successfully kept at bay, MANP will continue to monitor this process until the final budget document is crafted.

Update #9 (June 1, 2015)

The Taxation Committee worked a tax reform bill, LD 1141, An Act to Amend the Tax Laws, which was voted out of Committee Ought To Pass. The Committee DID NOT produce a Committee bill relative to PILOTS or SILOTS as initially thought early in the session and does not have any other work scheduled for the remainder of the session, thus all eyes are on the Appropriations Committee and the House and Senate chambers for votes on bills which committees have reported out on.

The Appropriations Committee has been meeting with their respective caucuses, however they have not had many work sessions for public consumption. The Committee did work all weekend long, both in negotiations and on mic. It appeared that there was indeed consensus among the Committee relative to income tax and itemized deductions. The Committee vote on income tax was divided with the Democrats and Senate Republicans voting in a proposal which does not include cuts to the state income tax and the Republican House members on the Committee voting Ought Not To Pass. Presently lawmakers are at an impasse with House Republicans supporting the Governor’s budget proposal as crafted, and House Democrats and the Senate supporting a proposal which would kill reductions to the state income tax rate. The Governor has vowed to veto alternatives to his budget and given that House Republicans are in support of the Governor’s Budget, it is not likely that the legislature will have the 2/3 votes necessary to override the Governor’s veto. The Senate and House Democrats would need 19 GOP votes to override a veto from the Governor.

Please keep in mind that the Appropriations Committee DID vote Ought Not to Pass the portion of the budget regarding taxing nonprofits.

Update #8 (May 15, 2015)

In addition to the news from the Appropriations Committee posted below, the Taxation Committee worked a series of bills related to restoring municipal revenue sharing. Their discussion included points that the committee had made in their recommendation to the Appropriations Committee to maintain revenue sharing. The Taxation Committee ultimately voted OTP- as amended on Rep. Tepler’s revenue sharing bill.

It is yet to be determined  if the Taxation Committee plans to craft a committee bill relative to PILOTS. Given that 100% of bills must be voted on and reported out of committee BY May 29th, the prospects of a committee bill does not seem likely. MANP will continue to monitor this.

There does not appear to be language in the Governor’s change package that would impose PILOTS or service fees on nonprofits. The change package does include language concerning the expansion of the sales tax base, which is also already indicated in the original budget document, LD 1019.  MANP will continue to monitor these documents.

LD 13: An Act To Provide an Exemption from Sales Tax and Service Provider Tax to Nonprofit Collaboratives of Libraries was voted out of Taxation Committee OTP, but was vetoed by the Governor. This language, however, IS included in the Governor’s budget change package.

In addition to the Democrats’ alternative tax plan, the Republicans now have an alternative budget plan which maintained itemized deductions inclusive of charitable giving, medical deductions and mortgage interest and also protects nonprofit property tax exemptions.

Update #7 (May 14, 2015)

Yesterday the Appropriations Committee voted not to include imposing property taxes on nonprofits as proposed in the Governor’s biennial budget.

Additionally, yesterday the Taxation Committee voted along party lines 7 – 5 NOT to eliminate the State Income Tax, another initiative also proposed in the Governor’s biennial budget.

It is yet to be determined  if the Taxation Committee plans to craft a committee bill relative to PILOTS. Given that 100% of bills must be voted on and reported out of committee BY May 29th, the prospects of a committee bill does not seem likely.

Update #6 (May 4, 2015)

On Monday April 27th, the Taxation Committee held work sessions for the following bills which have been of interest to MANP:

  • 1148: An Act To Implement a Local Ballot Referendum for Municipalities To Disallow Tax-exempt Status to Large Land Trusts, would allow municipalities, by referendum, to deny tax-exempt status to a land trust that are at least 20 acres in size. If the municipality denies tax-exempt status for a land trust, it must deny tax-exempt status to all land trusts of at least 20 acres located in that municipality.  This bill was voted unanimously Ought Not To Pass by the Taxation Committee.
  • LD 1007: Resolve, To Study the Tax Exemption Provided to Nonprofit Entities, explore whether the loss of revenue to a municipality is outweighed by the benefits provided to that municipality by the tax-exempt nonprofit organization.  MANP provided testimony neither for nor against (NFNA) for legislation. We included our testimony for LD 1007 in our testimony for LD 1148. We further informed the committee that we would be receptive to giving input in the event the committee opted to go ahead with another study on  this issue. This bill was voted unanimously Ought Not To Pass by the Taxation Committee.

On Wednesday April 29th , the Taxation Committee held  Public Hearings on a handful of bills related to municipal revenue sharing. While there was testimony in support of restoring and/or maintaining revenue sharing, and MANP recognizes the importance of fully funding municipal services, we did not provide public testimony during these hearings. MANP will continue to monitor legislation that would adversely affect the sector, such as PILOTs or other service fees imposed upon the sector.

We have still not heard any developments regarding the budget and taxation from the Appropriations Committee. We will continue to monitor the progress of this within the Appropriations Committee.

Update #5 (April 21, 2015)

The following bills had a public Hearing last week:

  • LD 1148: An Act To Implement a Local Ballot Referendum for Municipalities To Disallow Tax-exempt Status to Large Land Trusts – Current law provides a property tax exemption to certain property of benevolent and charitable institutions, including land trusts, incorporated in Maine. This bill allows a municipality, by referendum, to deny tax-exempt status to a land trust that is at least 20 acres in size. If the municipality denies tax-exempt status for a land trust, it must deny tax-exempt status to all land trusts of at least 20 acres located in that municipality. MANP provided testimony in opposition of this this legislation. Additionally land trust advocates form over a half a dozen nonprofits organizations provided testimony against this legislation.  The work session for this bill is scheduled for April 27, 2015
  • LD 1007: Resolve, To Study the Tax Exemption Provided to Nonprofit Entities – MANP provided testimony neither for nor against (NFNA) for legislation, as it is a concept draft for a study commission to explore whether the loss of revenue to a municipality is outweighed by the benefits provided to that municipality by the tax-exempt nonprofit organization. We informed the committee that we would be receptive to giving input in the event the committee opted to go ahead with another study on  this issue. The work session for this bill is scheduled for April 27, 2015

Find testimony for both of these bills here.

While the Taxation Committee did reference that they would be crafting a committee bill which would address  nonprofits and PILOTS, and other potential service fees, MANP has not seen such a committee bill to date. We will continue to monitor and provide additional information as we receive it.

Governor LePage held his 6th town hall meeting to discuss his budget last week in Ellsworth. LePage said nonprofits should have to pay at least some taxes because he thinks “they should contribute to society.” MANP will be submitting op-ed pieces to respond to this statement.

Maine Democrats are kicking of the promotion of their alternative tax plan with a twon hall event on April 22nd in Bangor.

#4 (April 10, 2015)

There has been a lot of discussion of tax policy at the State House, including the release of an alternative tax plan from Maine Democrats.

The Taxation Committee provided the Appropriations Committee with their report on the Governor’s budget earlier this week. The Taxation Committee was UNANIMOUS in their report NOT TO TAX NONPROFITS and to maintain municipal revenue sharing.  They did however, indicate that they would be exploring a Committee Bill which would be examining PILOTS and other service fees imposed upon nonprofits.

The Committee has  started to address a series of other bills which have potential to impact nonprofits, including LD 565 – An Act to Authorize Municipalities to Impose Service Charges on Tax-exempt Property Owned by Certain Nonprofit Organizations – The Public Hearing for this Bill was held Monday, March 30th and the Work Session was held Wednesday April 8th. The committee voted UNANIMOUSLY Ought Not To Pass. This bill will still go to the legislature but is highly unlikely to get passed.

The Committee on State and Local Government held a Work Session earlier this week on LD 724: An Act To Authorize Municipal Fire Districts To Impose Service Charges.  This bill authorizes municipalities to create by ordinance municipal fire districts to charge service charges, as an alternative to property tax revenue for fire protection. The Committee issued a divided report and is unlikely to get to the house floor for a vote.

Committee reports can be found here.

Other Bills MANP is Following:

  • LD 941: An Act To Improve Tax Expenditure Transparency and Accountability – This is a concept draft proposing to build upon that work and improve the evaluation process for tax expenditures and tax credits, including providing better information to the public about the cost and benefits of those expenditures and credits. The Public Hearing for this legislation has been scheduled for Thursday, April 16, 2015 at 1:00PM in Room 127, before the Taxation Committee. MANP will be attending this Public Hearing and monitoring this Bill.
  • LD 1148: An Act To Implement a Local Ballot Referendum for Municipalities To Disallow Tax-exempt Status to Large Land Trusts – Current law provides a property tax exemption to certain property of benevolent and charitable institutions, including land trusts, incorporated in Maine. This bill allows a municipality, by referendum, to deny tax-exempt status to a land trust that is at least 20 acres in size. If the municipality denies tax-exempt status for a land trust, it must deny tax-exempt status to all land trusts of at least 20 acres located in that municipality. The Public Hearing will be held Wednesday, April 15th in the Taxation Committee Room 127 at 10AM. MANP will be OPPOSING this legislation, as we do not want to start carving out certain members of the nonprofit sector for potential taxation,  which could have adverse implications for the sector as a whole.
  • LD 1007: Resolve, To Study the Tax Exemption Provided to Nonprofit Entities – This resolve proposes to examine the property tax exemption given to property of nonprofit organizations, including land trusts, and determine whether the loss of revenue to a municipality is outweighed by the benefits provided to that municipality by the tax-exempt nonprofit organization. As this is a concept draft, it is unlikely to go anywhere, however, MANP will be providing testimony neither for nor against (NFNA). The Public Hearing will be held Wednesday, April 15, 2015 in the Taxation Committee Room 127 at 10AM.  

MANP will continue to monitor these and other legislation that has potential to adversely impact the sector.

MANP is very much interested in learning how these proposed policies would impact your nonprofit organization, and has launched a very short survey to gather additional information about donations and PILOTS. If your organization has not already participated, we hope your CEO, Finance Director or other appropriate staff member will take a few minutes to complete the survey. The results of this survey will better position MANP to be an effective advocate on your behalf in the legislature.

#3 (March 27, 2015)

The Taxation Committee has continued meeting to work on the Governor’s budget as it relates to taxing nonprofit property and taxing sales of certain nonprofits related to amusements and recreations. While the committee has not made any definitive decisions about these proposals, there was a general consensus that taxing nonprofits as the governor has proposed is not the direction in which they would like to proceed. The committee will continue to work the budget today and have scheduled another work session for Wednesday April 1st at 1:00 PM. MANP will continue to follow this process and provide regular updates as they develop.

The Taxation Committee has also started to address a series of other bills which have potential to impact nonprofits.

Other Bills MANP is following:

  • LD 724: An Act To Authorize Municipal Fire Districts To Impose Service Charges.  This bill authorizes municipalities to create by ordinance municipal fire districts to charge service charges, as an alternative to property tax revenue for fire protection. The Public Hearing took place Wednesday, March 25, 2015 1:00 PM, State House, Room 127. MANP provided testimony on the bill. A work session has not been scheduled.
  • LD 565: An Act To Authorize Municipalities To Impose Service Charges on Tax-exempt Property Owned by Certain Nonprofit Organizations. This bill would allow municipalities to impose service charges on nonprofit properties in excess of $1 million dollars. The Public Hearing is scheduled to take place  TODAY, Monday, March 30, 2015 1:00 PM, State House, Room 127. MANP will be providing testimony against this legislation. If you are unable to attend this Public Hearing, you can still provide testimony for the Taxation Committee.
  • LD 252 : An Act To Increase Transparency of Entities Receiving Substantial Amounts of Public Funding -This bill is a concept draft pursuant to Joint Rule 208 and  bill proposes to enact measures designed to increase transparency by requiring that entities that receive a certain percentage of their funding from the State disclose the sources of their funding and the names of their donors on a publicly accessible website within 30 days of receipt of the donation. If the donation is associated with a specific exhibit or program, the name of the donor must be prominently displayed at the exhibit or before or after the program. The Public Hearing for this bill is April 1, 2015 in the Judiciary Committee, Room 438 of the State House.  As in previous years, MANP opposes these types of disclosure bills.

#2 (March 23, 2015)

The Legislature’s Taxation Committee has been holding work sessions on the Governor’s Biennial Budget and anticipates having a report for the Appropriations Committee no later than April 1st, 2015.

MANP is covering these work sessions with a priority on the Governor’s proposal to tax nonprofits.  The Maine Revenue Services made an interesting statement indicating that the governor’s budget proposal to tax nonprofit property was not tied to the elimination of municipal revenue sharing, as previously and repeatedly stated by the Administration. This is the first time anyone from the LePage Administration has decoupled these two issues. Maine Revenue Services’ Mike Allen elaborated that the Administration would be interested to hear about other options related to taxing nonprofits, such as different thresholds. Rep. Seavey from Kennebunk pulled up the Nonprofit Tax Review Task Force Report that MANP was involved in last session, where it was concluded that nonprofits should not be taxed and the State should look into service fees as potential options instead.

The Taxation Committee also discussed the Governor’s proposal to broaden the sales tax base. This component includes taxing amusements and recreations which would include museums, historical sites and tuition for summer youth camp programs. The Administration is trying to make a determination if Summer Camps would indeed fall under this section of the bill, as they are not specifically identified. The concern is if tuition for summer camps would be taxed, it may cause a potential hardship for less fortunate kids to attend.

Please continue to share your stories with us and your legislators – particularly those on the Taxation Committee – about how the Governor’s proposals would impact your organization. If your organization owns property and has calculated what the anticipated tax burden would be, please share this information with Lori Gramlich at LGramlich@NonproftMaine.org.

Updates on Legislation:

  • LD 724: An Act To Authorize Municipal Fire Districts To Impose Service Charges, authorizing municipalities to create by ordinance municipal fire districts to charge service charges for fire protection. The bill also authorizes municipalities to collect service charge revenue, as an alternative to property tax revenue, for the purpose of financing multi-municipal fire districts. The Public Hearing is scheduled to take place Wednesday, March 25, 2015 1:00 PM, State House, Room 127. This bill has the support of the ME Municipal Association as well as the Mayors Coalition.
  • LD 565: An Act To Authorize Municipalities To Impose Service Charges on Tax-exempt Property Owned by Certain Nonprofit Organizations – Would allow municipalities to impose service charges on nonprofit properties in excess of $1 million dollars. The Public Hearing is scheduled to take place  Monday, March 30, 2015 1:00 PM, State House, Room 127. We encourage you to attend this hearing if your nonprofit would be affected so you can share the anticipated impact.
  • LD 1007: Resolve, To Study the Tax Exemption Provided to Nonprofit Entities. This resolve proposes to examine the property tax exemption given to property of nonprofit organizations, including land trusts, and determine whether the loss of revenue to a municipality is outweighed by the benefits provided to that municipality by the tax exempt nonprofit organization. There has not been a public hearing scheduled for this legislation.
  • D. 941: An Act To Improve Tax Expenditure Transparency and Accountability. This is a concept draft proposing to build upon that work and improve the evaluation process for tax expenditures and tax credits, including providing better information to the public about the cost and benefits of those expenditures and credits. There has not been a public hearing scheduled for this legislation.

#1 (March 2, 2015)

The Governor’s Biennial Budget includes a provision that would allow municipalities to tax nonprofits. The Appropriations and Financial Affairs Committee along with the Taxation Committee began Public Hearings on the Governor’s Biennial Budget on February 17th, 2015.  On February 19th MANP was joined by nearly 50 nonprofit organizations to provide testimony in opposition of the Governor’s proposal to tax nonprofits with real property valued over $500,000. The testimony was very well received by committee members. MANP will continue to monitor this portion of the budget.

These committees will be holding work sessions on the budget in the coming week. We encourage nonprofits to reach out to these committee members as well as their own legislators to provide information on the impact of this proposal. Find more background and talking points on our Protecting Property Tax Exemption page.

Additionally, a number of bills which could potentially threaten the sector will also be heard in the taxation committee. Thus far we are monitoring the following bills:

  • LD 13 – An Act To Provide an Exemption from Sales Tax and Service Provider Tax to Nonprofit Collaboratives of Libraries. This bill provides an exemption from sales tax and service provider tax for certain nonprofit library collaboratives. This bill was referred to the committee on January 14th, with a Public Hearing on February 2, and a work session February 11th. The bill was voted out of committee ought to pass. It will be referred to the full legislature for a vote.
  • LD 565 – An Act To Authorize Municipalities To Impose Service Charges on Tax-exempt Property Owned by Certain Nonprofit Organizations.  This bill instead provides that a municipality may impose service charges on property that is exempt from taxation because it is owned or used by entities in the following categories: benevolent and charitable institutions; literary and scientific institutions; chambers of commerce and boards of trade; fraternal organizations operating under a lodge system; and property jointly owned or used by those entities. Service charges may not be imposed on property exempt as a house of worship or parsonage or a veterans’ organization.  This bill was referred to the taxation Committee on February 26th. No public hearings have been scheduled to date.
  • LD 322 – An Act To Enhance the Creative Economy by Providing a Sales Tax Exemption to Incorporated Nonprofit Performing Arts Organizations.  This bill provides a sales tax exemption for sales to incorporated nonprofit performing arts organizations. A public hearing for this bill is scheduled to take place on Wednesday March 4th at 1PM
  • LD 252 – An Act To Increase Transparency of Entities Receiving Substantial Amounts of Public Funding.  This bill is a concept draft pursuant to Joint Rule 208. This bill proposes to enact measures designed to increase transparency by requiring that entities that receive a certain percentage of their funding from the State disclose the sources of their funding and the names of their donors on a publicly accessible website within 30 days of receipt of the donation. If the donation is associated with a specific exhibit or program, the name of the donor must be prominently displayed at the exhibit or before or after the program.  This bill has been referred the Judiciary Committee and has not been scheduled for a public hearing. Status In Committee