Waterville continues to impose the highest property tax rate in Kennebec County. Yet Waterville incomes are among the lowest. Property tax is $22.80/1000 of valuation, while per capita income is just $16,430. The property tax burden is so onerous that new home construction is mostly non-existent. Businesses may also choose not to locate in the city because of the high property tax rate.
Waterville is a service center for at least eleven surrounding small towns. Surrounding towns rely on Waterville for health care, retail stores, a full service airport, a major railroad center, hotels, restaurants and parks and recreation. And, Waterville has more non-profits per capita than many other cities in the county, Maine General Hospital, Inland Hospital, Colby and Thomas colleges, to name a few.
There are two solutions that could alleviate this inequitable tax burden on Waterville home owners and improve the economic climate for the city. The first would be to enact a local option sales tax. The second would be to impose a property tax on large non-profits in the city.
Thirty eight states have a local option tax. Maine allows only Bar Harbor such a tax.
“This could be the year that local option taxes gain support. In his two-year budget, Gov. Paul LePage has proposed to reduce, then eliminate municipal revenue sharing, a decades-old program that allocates 5 percent of state sales tax revenues to municipalities in recognition of the services they provide.
Cuts to — or elimination of — revenue sharing especially hurts service-center communities,(Like Waterville) home to social service, retail and nonprofit entities used by people who live beyond the host community’s boundaries and don’t directly pay taxes to support the infrastructure they require.” (BDN)
In New Hampshire, Rep. David Hess (R) has introduced a bill (HB 1509) to expand the business enterprise tax to include large nonprofits, colleges, and universities. "Hospitals and private universities are big businesses," Hess said, arguing that despite being organized as nonprofits, they are among the state's largest accumulators of wealth. "I think we need to start a conversation about why we are carving out a special exception for them."
Some oppose a local option sales tax based on their opinion that taxes impact mostly the poor. That opinion ignores that there are large numbers of elderly poor trying to age in place in their homes in Waterville. Increasing property taxes will force these elder out of their homes and into over-burdened assisted living facilities and nursing homes. And, the tax burden on low income workers will no longer be so burdensome because starvation level minimum wages in Maine are beginning to be alleviated.
Waterville's planning board is charged with proposing solutions to funding the operation of our city. It would be timely for the board to consider one or both of the above proposals to reduce the property tax burden before the end of this budget year. Downtown revitalization begins this year.
The revitalization of downtown depends not just on beautification, but also on encouraging new businesses to fill the merchandising space that is being planned. High property taxes are a disincentive to investors and a severe burden on homeowners. Sales tax is passed on to consumers.