Erroneous payments to municipalities participating in the Tree Growth Tax Law program have been corrected, with some towns receiving checks in recent weeks and others writing them.
Due to errors in computing the reimbursement formula, about 110 municipalities were overpaid and the rest were shorted, said David Ledew, property tax director of Maine Revenue Services. Final payments to fix the problem went out last week.
“The checks are in the mail, so to speak,” Ledew said.
About 60 percent of all Maine land – totaling 7.5 million acres in commercial plots and 3.6 million acres of privately owned parcels – is classified under the program, which in 2008 cost the state $5.55 million to administer. That’s up from around $500,000 paid each year through the 1980s.
For plots of 10 acres or more, it allows landowners to pay property taxes based on what the land is worth as a woodlot. Land is valued according to location and the composition of trees on the property, ranging from $35 an acre for a hardwood lot in Washington County to $422 an acre for a softwood lot in Cumberland County.
The tree growth law, enacted in 1974, is hailed by many as a way to protect land from development and shield property owners from the effects of rising property values. But some say the program is too loose, allowing some people to put premium acreage in the program when they have no intention of using it as a woodlot.
Geoff Herman, director of state and federal relations for Maine Municipal Association, completed a study in September that examined whether the program is being abused in some places. Though Herman believes the majority of landowners use the program properly, others take advantage of “soft standards” in the law, allowing them to call prime real estate timberland.
“It values land based on what a forester would pay for it,” Herman said. “From a municipal perspective, land should be valued according to its current use. That’s not how this law works. It doesn’t look at real life.”
In one case identified in the study, a 95-acre parcel in Greenville includes 4.1 acres that front Wilson Pond. Herman said the case illustrates the contradiction of Maine’s tree growth law, which requires timber harvesting, with its shoreland zoning laws, which prohibit tree harvesting within 250 feet of water.
In Georgetown, there is a 12.3-acre parcel at the end of a peninsula overlooking the Atlantic Ocean, including a 4800-square-foot house at the very tip. The study calls this “one of the most valuable residential lots in the State of Maine.” Regardless, the 10.3 undeveloped acres of the parcel are valued under the tree growth program at $3650.
“For several reasons, including difficulty of road access and the restrictions on timber harvesting according to the state’s shoreland zoning regulations, the ability to harvest any timber on this property – even if that was the interest of the landowner – is extremely limited,” reads a summary of the study.
In Big Moose Township in Piscataquis County, a 25-acre parcel was enrolled in tree growth for years and paid annual taxes of $15.37, according to the study. In March of this year, the parcel sold for $2.4 million – about 1000 times its value under the tree growth formula.
Examples like these, said Herman, raise the question of whether the program is being abused.
The law requires landowners to develop a forestry management plan and refresh it every 10 years, but Herman suspects many of these plans are too soft in what they require of a woodlot. The plans, for proprietary reasons, are not public documents.
“A clever forester can write just about anything for just about any plot,” Herman said. “It aggravates some municipal folks. This is a transfer of burden away from some very well-heeled people.”
In addition, the program reimburses municipalities for a portion of their lost revenue, based on what the parcels would be assessed for as non-developable “back acreage.” In 2006, according to information provided by Ledew, towns were paid up to $104,000, as was the case in the Franklin County town of Temple.
Over an eight-year period leading up to 2006, Dixfield in Oxford County received the highest average payments at about $87,000.
Dixfield Town Manager Eugene Skibitsky, who was new to his job on Oct. 1, said he’s not aware of any problems associated with the program in his town.
Freeport Tax Assessor Bob Konczal, who said there are a handful of tree growth lots on the waterfront, said the program works partly because of the penalty process involved if a parcel in tree growth is developed. He said the program works well in Freeport.
“It should be kept in mind that land in tree growth is not a heavy burden on municipal services,” he said. “It meets a policy goal that I think all Maine people hold.”
Ledew said the Legislature has strongly supported the program over the years. With the exception of a period of difficult budgetary years in the 1990s, the program has always been fully funded, and there have been changes over the years to eligibility requirements and the formula used to compute reimbursements. Despite some of the perceived problems, Ledew said the program’s benefits are considerable.
“The people of Maine created these classifications for a reason,” he said. “To the extent that the tree growth program was created to preserve forest land, you have to call it a ringing success. It’s been very successful in doing what it is intended to do.”
(Statehouse News Service)
