Sec. 2. 36 MRSA §1108, sub-§1, as amended by PL 1999, c. 731, Pt. Y, §3, is further amended to read:

1. Organized areas. The municipal assessors shall adjust the 100% valuations per acre for farmland for their jurisdiction by whatever ratio or percentage of current just value is then being applied to other property within the municipality to obtain the assessed values. For any tax year, the classified farmland value must reflect only the current use value for farm or open space purposes and may not include any increment of value reflecting development pressure. Commencing April 1, 1978, land in the organized areas subject to taxation under this subchapter must be taxed at the property tax rate applicable to other property in the municipality, which rate must be applied to the assessed values so determined.

For each tax year beginning on or after April 1, 2002, the State Tax Assessor shall determine the amount of acreage in each municipality that is classified and taxed in accordance with this subchapter.__A municipality actually levying and collecting municipal property taxes and within whose boundaries this acreage lies is entitled to annual payments from money appropriated by the Legislature as long as the municipality submits an annual return in accordance with section 383 and it achieves the appropriate minimum assessment ratio described in section 327.__ The State shall reimburse municipalities 90% of the farmland and open space tax revenue lost as a result of this subchapter.__A municipality that fails to achieve the minimum assessment ratio established in section 327 loses 10% of the reimbursement provided by this section for each one percentage point the minimum assessment ratio falls below the ratio established in section 327.

The farmland and open space revenue loss is the difference between:

A.__The tax revenue that would be generated by the municipality, if not for this subchapter, on the just value assessment of all property classified as farmland and open space land within the municipality pursuant to this chapter, plus the total general purpose aid for local schools revenues that would have been received pursuant to Title 20- A, chapter 606 by the municipality or as the municipality's share if the classified farmland and open space lands were not enrolled under the farmland and open space tax program set forth in subchapter X, plus the revenue-sharing funds that would have been received pursuant to Title 30-A, chapter 223, between April 1st of the previous year through March 31st of the current year, if the classified farmland and open lands were not enrolled under the farmland and open space tax program set forth in subchapter X; and

B.__The tax revenue that would be generated by the municipality on the current use value assessment of all property classified as farmland and open space land within the municipality pursuant to this chapter, plus the total general purpose aid for local schools revenues that will be received by the municipality or as the municipality's share pursuant to Title 20-A, chapter 606 because the classified farmland and open space lands are enrolled in the farmland and open space tax program set forth in subchapter X, plus the total revenue-sharing funds that will be received by the municipality pursuant to Title 30-A, chapter 223, between April 1st of the previous year through March 31st of the current year.

SUMMARY

This bill redesigns the calculation of reimbursement from the State to municipalities to ameliorate the property tax shift that occurs when tree growth acreage is assessed at current use rather than just value. Current law purports to reimburse a municipality for 90% of its lost property tax revenue, but calculates the reimbursement on the assumption that enrolled property would otherwise be assessed at the countywide undeveloped acreage values. This bill establishes an actual 90% reimbursement, after adjusting for the beneficial education subsidy and revenue sharing that would be distributed to a municipality because of the reduced valuation attributable to tree growth enrollment. This bill also establishes the recalculated reimbursement formula for the purpose of ameliorating the property tax shift in municipalities where land is enrolled in the farmland and open space tax program. The

purpose of this bill is to provide a common formula of reimbursement for all current use tax programs in this State.