Almost unheralded, starting on August 8, the state of Maine will initiate a massive transfer of wealth. But this isn’t Robin Hood. The scheme will requisition wealth from the young, the working-class, and anyone who rents, to give massive tax breaks to wealthy landowners. The law is called LD 290, and if you haven’t heard about it, I can’t blame you. Greater Portland has has more than enough to occupy itself with its local politics eating up the headlines, but this quiet scheme to further dispossess the young working-class poses a significant threat to the prosperity of our city.
The pitch for this law, as it is intended, makes it out to be eminently unobjectionable. It goes something like this – Senior citizens, often on a fixed income, will suffer great financial hardship if they have to pay higher property taxes on their homesteads, which they’ve lived on for years. So Mainers sixty-five years or older will be able to fix their property tax rates at their current levels, so as not to force them out of their homes. Municipalities will not even suffer, as the state will compensate the towns of Maine with federal funds for the difference! Who wants to see poor grandmothers on social security kicked out of their homes?
Who could have a problem with this?
Yet all is not as it seems.
Everyone who lives in this state knows that it has become more and more expensive to do so. Rents have climbed at startling rates, houses (if they’re on the market at all) are sold sight-unseen to out-of-state buyers with cash, and resources for the homeless are increasingly strained. There are many reasons for this, the COVID-19 telecommuter revolution, the nationwide wave of urbanization, the general aging of America, and Greater Portland’s rising national profile for excellent amenities and culture. All these factors combine catastrophically with a critical housing shortage, itself caused by over a decade of under-building following the 2008 fiasco.
But despite all this new interest in our sleepy corner of the country, our wages have failed to keep pace. We are, essentially, having to compete with out-of-state buying power to procure housing, but we only have in-state wealth. It’s not an equation with a happy face at the end of it. Not only have our wages and salaries not risen enough, but even what raises we have received are being eaten away at by a decaying dollar. Inflation always hits the working-class hardest.
So this might look like a bleak prospect for Maine economically, but there is one bright side – as the value of Maine’s land increases, so too does the state’s ability to catch some of that windfall. Here in Maine, property taxes furnish a significant portion of the state’s income, and while sales and income taxes still make up a majority of state tax revenues, this is at least partially the result of a status quo in which Maine land is just not that valuable compared to that of other states. But today we are seeing a significant inflection point. Practically overnight, Maine property values are doubling, sometimes tripling, especially in the Greater Portland area.
While this is certainly grim news to potential home buyers, we can make some lemonade here. Rising property values incentivize more efficient housing, which the Portland city council too is attempting to encourage. Development of old, wasteful housing stock becomes more attractive to investors. And finally, the state government will benefit from the substantial revenue from property taxes, which it can put towards modernizing the housing market, subsidizing construction, and addressing the critical shortage in homes for Mainers.
All of this is severely threatened by LD 290, the Reverse Robin Hood. It’s important to see this bill for what it is, and look past the clouds intentionally obscuring your vision. Even the language used can be misleading, for example, when we hear “homestead”, one is wont to imagine a hardscrabble, laboring family just trying to make their way on some farm or shore, with a humble home and an acre or two. Maybe in Aroostook County, or somewhere. But do not allow yourself to think that this is the reality. There’s no income caps, no requirements to be on a fixed income – this is a law that will benefit the wealthy and almost entirely the wealthy.
If Maine was a vitality-infused state with a burgeoning cohort of young workers in their prime, and only a relatively small community of elderly residents, things might be different. But according to the U.S. Census Bureau over 21% of Mainers are over sixty-five years old. That means more than one out of every five residents could qualify under this law – and not pay their fair share in taxes. That certainly explains why it passed so easily, the senior electorate is huge and would never pass up a free payday.
But while we might all want to help grandpa, Maine is already hemorrhaging the young. (Under-18s make up only 18.4% of the population, less than the over-65s.) This is a problem. Young people are the ones who create wealth, vitalize commerce, and modernize economies, (not to mention simply work and pay taxes.) But just to show you I’m not hard-hearted, that it’s not all dollars and cents, young people are what give communities life. Young men and women creating culture, populating the offices during the day and the streets at night, people falling in love and having families, artists creating and innovators building, students and activists tackling entrenched problems older folks are too complacent to address, entrepreneurs taking risks and starting businesses and young consumers willing to give those businesses a shot. This is what makes a society alive, and Maine, to be frank, is dying. So instead of trying to staunch this mortal wound and capitalize on the influx of people and capital, we’re instead choosing to further coddle the interests of that geriatric class which Maine has already treated so well?
Even so, you might say, aren’t you working this up to be a substantially bigger deal then it really is? Proponents of the bill have only planned for use of $3.5 million dollars of federal funds, so surely the cost won’t exceed that figure. While not nothing, that’s is only a fraction of Maine’s total annual revenue, and it’s all federal dollars. Isn’t that a fair price to pay to ensure our elders aren’t being booted out of their homes?
Except that’s wrong. There was no demographic survey that showed the total would be under $3.5 million, the legislature is guessing that it will be under that limit for the first few years, but has no plans to curtail the ever-expanding public cost to non-house owning taxpayers. And there are no time limits, there are no adjustments, the bill is as expansive as it is unfair. The state of Maine will be on the hook to its municipalities for years, indefinitely, for the difference between what these senior citizens should be paying and what they will be paying. At first it may not seem to be too great a payment, but know that burden will increase every year, year on year, long after the federal money has run dry. This is a profoundly reckless move by the state government and will put a black hole in the expenses column. Instead of investing this money in Maine’s future, or spending it on Maine’s vulnerable, we’re instead giving away money to its richest citizens.
I won’t quibble any further with the math, as I am not an accountant and wouldn’t even know where to begin with this financial disaster. I won’t explicate all the much better projects Maine could spend few million dollars on. I won’t even dwell on the fact that what this bill represents, more pork for the land-owning class at the expense of working renters, is shameful in itself. Nor will I laboriously point out that the way the bill is structured, those who stand most to gain are not the envisioned rural poor, but rather the wealthy homeowners in southern Maine, most of whom do not rely on a fixed income. And I won’t even comment on the fact that since it’s application-based, many of the Mainers most at risk will be the least likely to actually know how to take advantage of it. Instead, I’ll point out that this both follows and strengthens a dangerous trend to strangle housing development.
As land becomes more valuable, the ability and desire to use it more efficiently both rise. When land isn’t worth much, like, say, a random two-acre plot in Township 22, it’d be obviously ludicrous to imagine building an apartment complex there. But here in Greater Portland, lots that used to be best suited for single-family homes become suitable for denser development. How? Well the appeal for investors is obvious, if the value is high, that means people want to live there, and if people want to live there, then large projects like market-rate apartments for working- and middle-class renters become economically sensible. But this only works if the current owners, those sitting on inefficient single-family houses, are motivated to sell. High prices are a motivation to sell in their own right, but so too are higher property taxes. When property taxes naturally rise alongside property value, individuals are nudged towards selling their homes to those who will more efficiently use the land. But LD 290 throws a wrench into this organic process by shielding landowners from the pressure to develop their properties. This will only worsen the housing shortage. At a time when Maine should be building massive amounts of units, we’re instead protecting those landowners who are most completely wasting useful land – and losing money in the process!
Not to excessively repeat the mantra, but we are in a critical housing shortage. We should be incentivizing owners of wasteful houses to open up their property to denser, more equitable housing. Instead this bill, in a deeply insidious fashion, does precisely the opposite, rewarding landowners for just sitting on these lots.
I’m sure that Trey Stewart, the state senator who proposed LD 290, was being truthful about his intentions. He represents Presque Isle, a ways away up in the far north, far from the housing woes of Portland. He claimed he wanted to protect the local elderly from unreasonably high property taxes. I’m not from The County, so I can’t speak to what the situation on the ground is like up there. But this law is affecting the entire state, and it is astounding that it seems no one considered the serious ramifications this law could have on southern Maine. Or, more likely, they did, and they decided that they didn’t care. A short-term payday for wealthy landowners is worth decades of housing crisis.
But even if we assume the best intentions, there is one part of the bill however that is completely indefensible. The law’s stated intent is to protect Maine’s senior citizens from being forced to leave the homes they’ve lived in for years. Despite all the enormous problems with this law, that’s not an inherently evil desire. But here’s where it all stops making sense – the tax break is transferable to a different property. That’s right. If an elderly Mainer is taking advantage of the law one year, in a house that he’s lived in for more than 10 years, he can move to a new house, and still pay a reduced rate property tax. This is explicitly the opposite of the bill’s stated intent. It is simply a free giveaway to any senior citizen.
Now, it is possible that hypothetical objector from earlier was right – maybe this is all overblown. It’s possible, unlikely but possible, that this law will have only marginal effects on both tax revenue and land use. But even so, it sets a dark precedent. Similar laws in California are a significant reason that the housing market there is in complete shambles. And it shows that the state of Maine is more interested in giving away tax breaks to the rich than investing in Maine’s future.
And as the saying goes – there’s nothing more permanent than a temporary solution. We need to change this now, before it becomes an entrenched entitlement for the land-owning class that will never go away.
And it is just that, an entitlement. We younger generations, Millennials and ‘Generation Z,’ are always being told how entitled we are. How we want the whole world on a plate, and don’t even have the manners to say “thank you.” But this is projection from Baby Boomers. They demand that the laws of economics be overturned so that they don’t have to downsize. They grew up with the most prosperous economy in the world, and by the time they hit retirement age their children and grandchildren were watching it all burn away. For Millennials, income is down, expenses are up, life expectancy is down, suicides are up. But even now, in their twilight, the Boomer generation is still pulling the ladder up behind them. They’re sacrificing Maine’s future just so they can live their last decade or so in even greater comfort and wealth. Meanwhile we have to watch it all slip between our fingers.
So what can we do? Somewhat lamely, I’m forced to advocate that we contact our representatives and demand nothing less than an immediate repeal. I’ve listed our local state senators below. If they won’t, then vote for someone that will. We need to make it clear that we don’t want to bail out the boomers, we want our future back.
Sen. Catherine Breen – District 25 – email@example.com
Sen. Bill Diamond – District 26 – firstname.lastname@example.org
Sen. Benjamin Chipman – District 27 – email@example.com
Sen. Heather Sanborn – District 28 – firstname.lastname@example.org
Sen. Anne Carney – District 29 – email@example.com
Sen. Stacy Brenner – District 30 – firstname.lastname@example.org
Ashley D. Keenan – Ashley is an editor of The Portland Townsman, writer on urbanism, local small business-owner, and Maine native. Her work primarily covers the national housing crisis, building sustainable and livable cities, responsible market economics, and New England culture and history. She lives in Portland with her fiancé and can be personally reached at email@example.com.