Plagued by member vacancies, turnover and the pandemic, the new chair of the Maine State Board of Property Tax Review and the governor’s office say they are working to move forward dozens of cases before the board that have been stalled for years.
The logjam of legal work has created uncertainty for towns waiting to hear if they will be allowed to keep more than a million dollars in tax revenue that’s already been collected.
“We’re working on clearing up the backlog,” said Chairperson Philip E. St. Onge. The board has heard only one of the more than 30 cases before it in the past two years.
The board is responsible for resolving disputes between taxpayers and municipalities that cannot be settled at the local level. A number of the cases are related to the “dark store” theory, an argument used by companies around the state, including Walmart, in an attempt to lower their tax bills.
Members hear appeals from property owners whose requests for tax relief were denied by assessors or local boards of assessment review. They deal only with non-residential property with a valuation of at least $1 million, as well as issues related to tree growth, farmland, open space, mine sites and property classified as working waterfront.
Governor’s office trailing in appointments
Appointments to the board are made by the governor’s office but have lagged for years. The LePage administration resisted making appointments, according to one board member, and the Mills administration has not appointed members as quickly as some hoped.
Of the 15 members, statute requires three from each of the following professions: attorneys, real estate brokers or appraisers, assessors and engineers, as well as three public representatives with knowledge of taxation, finance or property valuation.
Five seats are empty. Board member Kerry Leichtman and Chairperson St. Onge said they have never seen a full board, a large part of the reason for the backlog.
Cases are heard by a five-member panel including one member from each area of expertise. The only full slate at the moment is public representatives. Only one of the three attorney positions is filled.
“We have more people, we can hear more cases,” said St. Onge. “It’s simple math.”
Members, whose terms last for three years (they can continue to serve beyond their expiration dates until they are reappointed or replaced), are paid $75 for hearing days but are not paid for preparing for a case, which can take days.
In some cases, appointments have taken years to move through the process. Leichtman said it took years for him to be appointed after applying. He applied during the LePage administration and didn’t hear anything for two years. He was appointed by Gov. Janet Mills shortly after her administration took office, but then COVID happened and everything shut down.
The governor’s office did not grant The Maine Monitor’s request for an interview. A Freedom of Access Act request for information on board vacancies and cases has been pending for more than a month.
The Mills administration has appointed three members, including Leichtman, broker Hoa Hoang and attorney John Shumadine, said the governor’s office press secretary, Lindsay Crete, in an email.
Kirsten Figueroa, commissioner for the Department of Administrative and Financial Services, became aware of the lengthy list of unheard cases in late January. She wrote to the chair, “noting that the Department was ready to provide assistance, as able and appropriate, to remedy any barriers that stand in the way of clearing the bottleneck.”
The governor has proposed two paid staff positions, a supervisor and a clerical staffer, in her supplemental budget. “If approved by the Legislature, the goal would be to move forward with that hiring as soon as possible,” Crete wrote.
Leichtman and St. Onge welcomed the proposed paid staff positions, which they said would help address a number of issues and create some institutional memory.
Time frames, training suggested
Leichtman said he also would like to see the board implement time frames to resolve cases. That’s how it’s done at the local level, which keeps requests from languishing.
“When I get an application for an abatement, I have 60 days to respond,” said Leichtman. “The reason for that is so that I don’t drag my feet.” No time frames exist at the state board level.
“With the state board it’s not finite and it needs to be. It needs to follow the same guidelines that assessors follow, that are typical in a local board of assessment review,” said Leichtman. “Why should the local board have these strict deadlines and the state board not?”
There is also no formal training for members, even as cases have become increasingly technical and complex, with millions of dollars in abatements at stake. A preparation packet for a case involving Walmart was several inches thick, full of dense legal and assessing documents, said Leichtman.
“This was kind of a sleepy back office board that wasn’t doing things of the size and magnitude we’re being asked to do now, and we haven’t caught up,” said St. Onge. “This board wasn’t dealing with cases of the size and magnitude we are today. The bigger the numbers the more important it is, both to the business and the town.”
Despite the increasingly technical nature of the issues before it, board members, even those who may have little experience in tax law or assessing, are expected to learn on the job.
“We were on our own,” said St. Onge, whose background is in education. He taught himself by listening to testimony, attending meetings and seeking advice from other board members, but said he has only attended “a couple” of actual case hearings.
Backlog holds municipalities ‘hostage’
Assessors around the state expressed frustration with the years-long wait to have cases heard, which is causing uncertainty for municipalities wanting to know whether they will have to return revenue from disputed property tax cases.
“Municipalities are held hostage” while waiting for a decision, said Leichtman, who also serves as assessor for Camden and Rockport. “Do we have this revenue or don’t we? They need to know … when the money comes in it’s theirs to keep and use, and spend on the budgeted items.”
It’s likely that taxpayers wind up picking up the slack, he added, because local officials might not feel comfortable spending money they may eventually have to return.
Thomaston is one of the communities waiting on hearings for several cases involving Walmart, with more than $8 million in abatements and hundreds of thousands of dollars in property tax revenue at stake.
The earliest Thomaston case before the board, dating back four years, was finally scheduled in February for a hearing at the end of this month. That hearing was recently postponed at Walmart’s request, said the Thomaston assessor, Dave Martucci, in an email. Martucci was not given a reason. The decision to postpone is made by the chair of the panel assigned to the case, in consultation with the Maine Attorney General’s Office.
“The state board has been dysfunctional for many years,” said Martucci in an interview earlier this year.
Assessors say cases like the one in Thomaston, in which companies argue that their thriving, open stores should be compared to empty warehouses for the purposes of tax assessment, have little merit and the company is likely to lose. But without a decision from the state board, they have little to prevent subsequent appeals. Walmart filed similar appeals in Thomaston in 2019, 2020 and 2021.
Had the board heard the 2018 Thomaston Walmart case in a timely fashion, it likely would have prevented those subsequent appeals, said Martucci, by providing a clear answer for assessors not just in Thomaston but around Maine. Since 2015, companies have filed more than 60 such requests in communities around the state, according to data compiled by The Maine Monitor, costing taxpayers tens of thousands of dollars in staff time and legal fees.
Last week, the state Senate passed a bill by a 21-13 margin that will curtail the ability of big box retailers to file “dark store” challenges to local property tax bills. The bill previously passed the House, 77-55.
St. Onge was confident that adding members and paid staff to the state Tax Review board will help move cases forward, and provide relief to towns and property owners waiting for answers.
“The board is great, they’re fantastic people, really giving of their time and expertise,” said St. Onge. “We’re going to get this stuff cleared up with the help of the governor’s office filling these seats.”