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(Posted March 25, 2011) - Yesterday was the work session for the three excise tax bills heard last week.  LD 436 and LD 706 were voted Ought Not to Pass with unanimous votes.

As I expected however LD 79 may be a problem.  This bill originally requires that we use 90% of the MSRP before calculating excise tax.  This 90% number was developed because year after year Committee members were told that the actual purchase price of vehicles is at least 10% below the sticker.  This year the number was changed to 5% below the sticker.  Using that logic the Committee amended LD 79 to require that 95% of the MSRP be used to calculate the excise tax.  Using 95% of the MSRP would be a 5% reduction in excise revenues.

The amended bill had a 5 to 3 Ought Not to Pass vote but that means it will go to the House and Senate for a floor vote. 

If a 5% loss is not something your municipality can absorb then contact your delegates and urge them to defeat this proposal.

LD 462 which would require us to refund any excess credit amount was a unanimous Ought Not to Pass vote.

The request to increase the IFW agent fees will be heard Monday at 1:00.  For everyone who has complained about this for the past few years this is your chance to be heard.  Come testify, submit testimony or encourage your delegates to support this proposal.

The motor vehicle agent fee increase (LD 288) has also gone to the floor for a House and Senate vote.  The majority of the Committee had a Ought to Pass vote so again contact your delegates and be heard.

On Thursday, March 10 the Transportation Committee will be hearing three bills that could impact us:

•  LD 454 -An Act To Permit Variation in Motor Vehicle Registration Expiration Dates – This would allow a registrant to chose their expiration month.  As worded this appears to only be allowed on new registrations.  They cannot change the date each year.  As of this moment the Executive Board has not taken a formal position on this.  Some responses I have received have been against it and other don't really care.  I am waiting to hear from the Board as to how we should proceed so if you have strong opinions on this please let us know.

•  LD 574 - An Act To Extend the Time of a Temporary Registration Plate – This extends the 14 day temporary registration plate to 30 days. I'm not sure we even care about this but I listed it just in case.

•  LD 630 - An Act To Require Disability Registration Plates To Be Renewed in Person When Registering at a Municipality – I'm not even sure I understand this bill.  I've attached it for you to read.  If I get it, a person who has a disability plate or placard is required to show proof of the disability every 4 years on a form prescribed by the Secretary of State.  This sounds like that form can now be turned into the municipality, as long as it is done in person.  I'm not quite sure what we are supposed to do with it.  If we say “okay” go ahead and keep your plate or placard and that's it or if we send it to the State.  This isn't happening now is it? It doesn't in Bangor so I'm confused.

The big day is March 17 – Mark your calendars !!  This is the day that the Taxation Committee takes on five excise tax bills.  The meeting is at 1:00.

•  LD 79 – This would require that we use 90% of the MSRP. Basically a 10% reduction in excise tax revenue.  This will have support from some Taxation Committee members.

•  LD 238 – This would better define the exemption for Charitable Institutions and remove it for Scientific and Literary Institutions.  I expect that we will testify in favor of this bill however we do not have any real data on how much excise tax we are losing because of the exemption.  If anyone has any numbers it would be appreciated.

•  LD 436 – This would require excise tax be based on purchase price.  This always has had strong support in the past and I expect it will again this year.  Based on past testimony the Dealerships have stated that the actual purchase price is normally 10% below the “sticker” which is why the 90% MSRP always comes up. Anticipating this bill I have been tracking purchase price versus MSRP for about a month and found some very surprising results.  Looking at 40 brand new 2011 vehicles we found that 18 of them actually had a purchase price higher than the MSRP.  In total we tracked 204 car sales (these were through dealerships only), as mentioned only 40 of them were 2011 model year,  there may have been a few brand new 2010 holdovers but for the most part these were all used vehicles being sold to new owners.  Comparing these purchase prices to the MSRP we found that we would have lost in total around $9,700 in excise tax.  This would result in about a 2.5% reduction in excise tax for the year.  Again this is only dealer sales so that percentage would be higher when factoring in private sales but it is still lower than I expected and a little confusing.  A summary of this bill implies that the purchase price will actually be the original first time purchase price to the first owner.  The wording of the bill is not as clear so we don't know the actual intent of the deal.  If it is the original purchase price (like the requirement for the commercial vehicle reimbursement program) then some guidance and tracking requirements need to be included.

•  LD 462 – This would allow a registrant to apply a credit from a vehicle transferred, totally lost by fire, theft or accident or junked or abandoned to apply that credit to any one or more vehicles acquired by the owner within 30 days after the transfer or loss.  It also requires that any excess credit must be refunded.  It does not matter where the initial excise is paid, the municipality performing the credit would have to pay the refund.  It does not state what happens after the 30 days. It can be assumed that any credit is lost if the replacement vehicle is not acquired within that time frame.  This also seems to take out the option of using the credit on a renewal.  The wording states that the credit is applied to any vehicle or vehicles “acquired” within 30 days.  There is no wording indicating vehicles already owned could use the credit. 

•  LD 706 – This one is interesting.  First it would drop the MSRP to 90% just like LD 79 but this proposal also changes the mill rate structure.  The new rates would be: Year 1 - ..024(stays the same), Year 2 - .020, Year 3 - .015, Year 4 - .013, Year 5 - ..010, Year 6 - .006, Year 7 and older - .0035.  Comparing these rates to 20,000 renewals and new registrations done by the City of Bangor I found that the new rates would result in an approximate excise tax reduction of 3.6% or $169,000.  The net result of the bill gives new car owners a break (a 10% reduction in the excise tax they would pay), Year 7 and older owners a break (approximately 21% reduction) and making the in between people pay more.  Year 3 actually nets to no change but Years 2,4,5 and 6 see increases from 2.9% to approximately 38.5%.  I don't know the intent of this bill but it appears to give a tax break to the majority of vehicle owners (62% of Bangor vehicles are Year 7 or older) while encouraging owners to buy new vehicles that would be better on emissions and fuel mileage.  This is going to be a hard fight especially since the loss of 3.6% is one of the smallest proposals we have seen in recent years and it addresses several issues, the first that the MSRP is an inflated number, that if a tax break is given it should go to the largest number of registrants it can (also assumed is that a large portion of people who own Year 7 or older vehicles are elderly) and encourages the purchase of new car sales to cleaner and more fuel efficient vehicles.

Anyone who wants to go and testify will certainly be welcome or contact your Delegates to testify on your behalf.

The following is a list of upcoming proposals that may be of interest or will impact us directly:

LD 27 - An Act Concerning Maine Veterans License Plates – This allows a veteran to only have to show the proper documentation for veterans plates during the initial application, the Secretary of State must keeps copies of the records for future applications. It also expands the allowable paperwork a veteran can use for the application.

LD 79 - An Act To Base the Excise Tax on Vehicles on a Percentage of the Manufacturer's Suggested Retail Price – This would require us to reduce the MSRP to 90% before calculating the excise tax.  The end result is a 10% reduction in your excise tax revenue.  We fight this every year so once again talk to your Council, Selectmen and State Delegates and discuss how a 10% reduction in revenue will impact your community.

LD 117 - An Act To Amend the Location of Motor Vehicle Excise Tax Collection for Motor Vehicles Owned by Public Utilities – This bill removes the requirement that Public Utilities must register all their vehicles in the municipality that their main office is in.  The change moves the Utilities into the same rules as other businesses that if they have a secondary office and vehicles are housed at that second location then those vehicles must be registered in that secondary community.  This bill initially looked pretty straightforward and removed a requirement that seemed odd considering the rules governing all other businesses however it has been causing a stir as some communities are fearing a huge exodus of Utility fleets to neighboring towns. 

LD 149 - An Act To Authorize Municipalities To Impose Service Charges on Tax-exempt Property Owned by Certain Nonprofit Organizations – This allows a municipality to impose a service charge against the owners of certain exempt property if they or other users of the property receive more than $150,000 in gross annual revenue.  The service charge must be calculated according to the actual cost of providing municipal services to that property and the service charge collected must be used to fund those services.

LD 175 - An Act To Create a Short-term All-terrain Vehicle Registration System – This bill would create a nonresident short term registration for ATVs.  Nonresidents can purchase a 7 consecutive day registration for $53.00 or a yearly registration for $68.00.  They can purchase multiple 7 day registrations in one season.

LD 229 - An Act To Protect Homeowners Concerning Property Liens – As currently written this bill would require that any payment (partial or otherwise) made by a third party after the lien has been filed but before the foreclosure date be disclosed to the delinquent taxpayer.  This disclosure would have to happen within 30 days and be in writing signed by the tax collector and left at the taxpayers last and usual abode or mailed certified mail return receipt requested. The mailing costs are paid by the municipality and not passed onto the taxpayer.  Obviously this raised major concerns with us having to send out certified notices, at our cost, every time a mortgage holder made a payment.  The sponsor of this bill has recently been contacted and admitted that mortgages holders were not thought about when the bill was originally written.  The intent of the bill was to prevent possible fraud by third parties attempting to pay the tax and obtain some kind of ownership or lien holder status against the taxpayer.  The sponsor has indicated that the bill will be re-worded to specifically exclude mortgage holders and only require regular mail not certified.

LD 238 - An Act To Limit the Vehicle Excise Tax Exemption Provided to Benevolent and Charitable Institutions and To Repeal the Exemption Provided to Literary and Scientific Institutions -  This bill will limit the excise tax exemption for benevolent and charitable institutions and repeal the exemption for literary and scientific institutions.  The limitations imposed on benevolent and charitable institutions requires that the vehicles owned by them are used solely for the institution's purposes and primarily for transporting or delivering goods to persons who have been determined to be eligible to receive charitable services from the institution.

LD 288 - An Act To Amend the Laws Governing Municipal Motor Vehicle Registration and License Agent Fees – This proposal has been put forth by the MMTCTA and will increase the agent fees from the current $3.00 and $4.00 rates to $5.00 and $6.00.  This proposal has been prepared as the result of yearly comments by the Association members that the current rates do not properly reflect the cost and time involved in acting as an agent for the State.  This proposal would result in increased revenue without raising property taxes and is optional to the customer.  Municipalities can also chose to charge a lower rate if desired.  The last increase was in 1991.

This LD is scheduled for a public hearing next Thursday, February 24, 2011 at 1:00 in Room 126 in the State House.  At least one MMTCTA Board member will be there to testify in favor of the bill but we certainly encourage anyone else who would like to testify to also attend.  This is the bill that will raise our agent fees to $5 and $6. If any of you or your municipalities would like to prepare a written statement but not testify you can email me your statement on your letterhead and I'll present it to the Transportation Committee.  We would like to show that we have a lot of support for this bill but understand that not everyone can get up and speak in front of a crowd. Also, if any of you have pertinent information such as how much on average it actually costs to complete a registration, or safeguard the plates and stickers, prepare reports etc. please email me and we'll use this information while preparing the Association's testimony. I have been informed that the State Motor Vehicle Office will be testifying neither for nor against.  Their estimate is that 75 to 80% of the 1,000,000 registrations are finished at the municipal level and another 100,000 are done through rapid renewal.  This leaves 100,000 to 150,000 that are processed by the branches.  With this relatively small number of registrations spread throughout the State people still complain about 2-3 hour waits at the branch offices.  I know they do more than registrations at the branches but I was hoping they would have testified in support of this bill since it would only take a small number of municipalities to switch to excise only to cause them to be overwhelmed.  Hopefully we can convince the Committee that this is needed. (Posted by David Little)

LD 289 - An Act To Amend the Laws Governing Municipal Recreational Vehicle Registration Agent Fees – This proposal has been put forth by the MMTCTA and will increase the agent fees from the current $1.00 and $2.00 rates to $3.00 and $4.00.  This proposal has been prepared as the result of yearly comments by the Association members that the current rates do not properly reflect the cost and time involved in acting as an agent for the State.

LD 293 - An Act To Waive Snowmobile Registration Requirements for Canadians Riding on Maine Trails – This bill will allow a snowmobile registered in Canada to be operated in Maine without a Maine registration provided that the snowmobile is used on State-funded trails, is insured in Canada and the rider belongs to a snowmobile club located in Maine.

LD 297 - An Act To Allow Treasurers To Process Tax Lien Discharge and Sanitary District Sewer Lien Documents Using Facsimile Signatures – This bill will allow treasurers to use a facsimile signature for sewer liens, tax and sewer lien discharges and tax and sewer lien waivers of foreclosure.  The current law requires these forms to have a “live” manual signature.

This last bill does not impact us directly but may be of interest to others in your municipality.

LD 357 - An Act To Repeal Motor Vehicle Inspection Requirements – This bill will repeal the annual motor vehicle inspection requirement for all registered vehicles.

The Revisor's Office received over 7,000 bills so there will be plenty more coming including several to require excise tax be paid on the purchase price and one that appears to repeal the excise tax laws completely.

Stay tuned and don't be afraid to get involved.  The more voices heard the better.

Three more bills for us to consider:

LD 436 – The annual bill to base excise tax on purchase price.  It appears from the wording that the purchase price will be the original price paid by the first owner.  There is no mention as to how we are supposed to track that down years later or for sales originally made out of state.

LD 454 – This bill will allow a registrant to pick their expiration month when they register for the first time.  A pain for us and I see a lot of pro-rating of excise tax if this passes but I'm not sure that this is a major issue. 

LD 462 – Excise tax credits. Always a fun topic.  The way I read this the proposed change will allow a registrant to transfer their excise tax from a vehicle that is transferred or a total loss to one or more vehicles that are acquired within 30 days of the transfer or total loss.  That means to me that if it is after 30 days from the date of transfer or loss then they cannot transfer any of the credit.  The other part of this says that if the credit amount is more than the excise tax on the one or more vehicles then the municipality MUST refund the balance to the registrant.

The MMTCTA Board would appreciate any thoughts or comments you have regarding these proposals.  Your input will help guide us as to what proposals we focus the most on during the public hearings.

The public hearing for L.D. 117   An Act To Amend the Location of Motor Vehicle Excise Tax Collection for Motor Vehicles Owned by Public Utilities will be Tuesday February 15, 2011.  The hearing will take place in front of the Taxation Committee at 1:00 in Room 127 in the State House.

The public hearing for L.D. 288   An Act To Amend the Laws Governing Municipal Motor Vehicle Registration and License Agent Fees will be Thursday February 24, 2011.  The hearing will take place in front of the Transportation Committee at 1:00 in Room 126 in the State House.