By KEVIN WACK
Blethen Maine Newspapers Saturday, December 23, 2006

Blethen Maine Newspapers

Early in Gov. John Baldacci's second term, a proposal to freeze the tax values of year-round homes has emerged as a cornerstone of his agenda.

The measure, which will face an uphill fight if history is an accurate guide, would lock in the value of full-time residents' homes. For example, someone who buys a house in 2007 would still pay taxes ten years later based on the property's initial value, although there would be an annual adjustment for inflation.

"People are angry in Maine about their property taxes," Baldacci said Thursday in a meeting with the editorial board of the Portland Press Herald/Maine Sunday Telegram. "Let me just say, I'm trying to deal with the relief that people are demanding."

Because Baldacci's proposal is a constitutional amendment, it needs two-thirds approval by the Maine House and Senate, as well as the OK of the state's voters.

The Democratic governor proposed the same idea in 2005 and 2006, but both times it failed to garner enough support.

He said Thursday that the state did a lot during his first term to address homeowners' concerns about property taxes, including an increase in the state's share of education funding. But, he added, voters still feel that not enough has been done, and a string of statewide referendum questions has tapped into that resentment.

"And that's why you need a blunt object," Baldacci said.

"I'm not running for anything, OK?" continued the governor, who has said that this year's re-election campaign would be his last. "I'm going to use my gut, and I'm going to use my instincts that tell me that we need to go at this directly."

In response to a question about whether his proposal would merely shift the tax burden to future home buyers, Baldacci said, "I'd like to protect people who are already here first."

He made clear that he will oppose any tax reform proposal -- whether it would broaden the state's sales tax base or increase the lodging tax -- if it does not also include a freeze on the home values of year-round residents.

Baldacci did say that he would support a 10-year sunset provision, which would allow the tax valuation freeze to be reconsidered after a decade.

But that was his only offer of compromise with the proposal's opponents, which include the Maine State Chamber of Commerce, Maine Municipal Association and Maine Merchants Association.

Baldacci, 51, won re-election in November, emerging from a five-candidate field with 38 percent of the vote. He returns to office with Democrats holding a 29-seat majority in the House and a slim 18-17 majority in the Senate.

During the hour-long meeting Thursday, Baldacci highlighted other parts of his budget proposal, which he plans to sell to Maine voters in a televised speech Jan. 5.

He said the state needs to cut the administrative costs in K-12 education without sacrificing excellence in the classroom.

"We're paying $2,000 more per pupil than the national average, and our teachers are making $7,000 less than the national average," Baldacci said. "So we know where the money's not going."

The governor said he's also proposing cuts in the administrative cost of state government and a statewide expansion of the Pine Tree Zone program, which offers tax breaks to new businesses. And he said his budget will include more money for higher education and research and development.