Joan Merriam bought land in Rockland’s south end 15 years ago to spend her retirement in the area where she grew up.
When she was a child, the city had a reputation for being rough around the edges, she said. In the 1970s, it had one of the highest crime rates in Maine, and it was known through the 1980s for the rotting fish odor emitted by a herring rendering plant downtown
Then industry declined, and in came the art galleries and restaurants, slowly transforming the city into a cultural destination.
Merriam’s property and the modular home she added there were initially worth about $200,000. This summer, the former schoolteacher learned their value had more than doubled when the city completed its first revaluation — a process of aligning locally assigned values with the current market — in 20 years.
It’s not clear yet how that will affect her taxes; revaluations are supposed to distribute a town’s tax burden more equitably and often lead to lower across-the-board mil rates. But at least two homes in her neighborhood have gone on the market because their older owners fear increases, Merriam said. She can keep up with her own taxes for now on her fixed income, but it’s not comfortable.
She knows others in the city who have seen their values go up steeply, and has family members in nearby Camden who were similarly reeling after a revaluation last year.
“We’re not alone in this,” she said.
Maine municipalities have struggled for years to manage increasing budgets, which are funded primarily through property taxes, in the face of inflation, higher costs, education requirements and wage contracts. That has frustrated many voters, who have revolted against school budgets, harassed town staff and tried to recall elected officials.
At the same time, towns are catching up on delayed revaluations that reflect postpandemic jumps in residential property value. That increase has made it harder for new buyers to enter the market, but in some cases is also causing people who do own homes to worry that they won’t be able to keep them if their taxes jump.
The effects can be seen clearly in once-industrial coastal towns that have lost major commercial taxpayers and become attractive to tourists and new residents. Though state government is studying options for reforming the property tax system, it’s not clear what solutions there are.
Full revaluations can be expensive, which leads some towns to delay them, even though regular revaluations should distribute taxes more accurately, help residents to claim their state exemptions and lower mil rates. In theory, a revaluation will cause taxes to drop for a third of the population, stay the same for another third and increase for the final third. Increased values may also benefit those who want to sell their property.
On the flip side, rising property values can also increase how much towns pay for public education.
Currently, the state uses property values to determine how much of a town’s education costs it will reimburse. Districts with rapid increases need to contribute more before getting funding, leading to a decrease in subsidies, according to a report on education funding structure released this year by researchers at the University of Southern Maine.
“When the growth pattern is repeated for multiple years in a row … the effect can be substantial,” researchers said. “This raises a particular concern about the impacts on low-income and some fixed-income residents whose incomes did not rise at the same rate as their property values.”
State lawmakers recently formed a new task force that will study the property tax structure again and make suggestions for change. Past proposals to change how state and local governments rely on property taxes have come up short in finding larger scale solutions.
Many Mainers currently rely on the state’s homestead exemption, which reduces the value of a home by up to $25,000 for tax purposes for year-round residents. A 2022 attempt to expand that by freezing property taxes for people over 65 was repealed in 2023, partly because of the high costs it would put on other taxpayers.
In Bucksport, another coastal town that lost a big taxpayer when the local paper mill closed a decade ago, the state’s assessment of property values has risen by more than $270 million in the last five years, from $444 million to nearly $716 million. In Rockland, it has risen from about $828 million to $1.3 billion.
Recent revaluations often reflect jumps in value from the pandemic, then-assessor’s agent Jim Murphy told the Belfast City Council in October after its first full revaluation in 21 years. That can lead to challenges for some homeowners by contributing to steep, sudden tax hikes.
“How it affects people in town is tragic, in some cases,” he said of long gaps between revaluations, which he called unconscionable. “By not doing revaluations on a regular basis, we are taxing people out of their homes.”
Once home to poultry processing plants and now an artistic magnet, Belfast’s taxable valuation jumped from around $880 million in 2020 to more than $1.3 billion, with some especially stark changes to properties along its waterfront. The revaluation dropped the town’s overall mil rate by about a quarter, but that didn’t allay some homeowners’ concerns.
Many residents were “very afraid” they would lose their homes as values increased, Councilor Neal Harkness said at that meeting, though he noted the city had never taken a habitable home for tax nonpayment in his decade on the council.
Half an hour east in Bucksport, some residents took to social media last month to say their tax bills had tripled in two or three years, or gone up $2,000 in a single year.
One of them, Jason Bishop, has pushed to recall the entire Town Council over his outrage with both rising property valuations and taxes. In a Sunday email to town officials that he shared with the Bangor Daily News, Bishop said that he has seen taxes almost double in two years on a house his family purchased to make into a multigenerational home, which he attributed to irresponsible spending.
“The fact is this is a failure and hard choices will have to be made by the town to cut and by residents to decide if they want to stay or sell for whatever they can get,” Bishop said in the email.
He has since spoken with a councilor and said Sunday he is still considering a recall effort for members who are not up for reelection this fall.
Bucksport’s assessor, Justin VanDongen, declined an interview request and did not answer a followup question about the town’s revaluation history. But in a statement on the town’s website, officials have partly linked recent tax increases to a change in property valuation.
“Another contributing factor was that local property valuations had fallen below the state’s assessed values, prompting the Town to update its cost schedules to bring them back into alignment,” the unattributed statement says.
The biggest driver of local tax increases has been a loss of tax revenue, according to the statement. Bucksport’s residential property taxes were long offset by those paid by the Verso Paper mill, which made up about 40 percent of the tax base when it closed in 2014, and officials have made a continued effort to attract new industry.
Before its closure, the town had saved up $8 million to avoid raising taxes steeply, they previously told the BDN. But now, there isn’t enough money left, and property taxes have to make up the rest, officials said in the statement explaining the increase.
“While these adjustments are difficult, they are necessary to ensure the Town can continue to provide essential services and maintain long term financial health,” the statement said.
Belfast and Rockland officials also didn’t respond to requests for comment.
In Rockland, Merriam said the transformation that increased property values in her city has had some positives: newcomers are typically artistic and well-educated, bringing new galleries and a growing creative scene.
On the other hand, teachers, policemen and other local workers have trouble finding housing, and Merriam said it seems newcomers are more involved in town government than longtime residents.
“I feel like the people that have lived here for generations feel like they don’t have as much say,” she said.
Merriam thinks something like another version of the property tax freeze for seniors that Maine temporarily introduced would help. But she isn’t optimistic it could work, because it would cost so much money.
