Priority Conservation Tax Legislation Moves Forward

Over the past year, Maine Coast Heritage Trust has been advocating for changes to two unrelated state tax statutes: Sales Tax and Open Space.  While the legislature’s Taxation Committee was not prepared to support either initiative in 2023, they set in motion efforts to bring the proposals back in 2024. In February, both proposals have taken significant strides forward.

Expanding Sales Tax Exemption for All Nonprofits

On February 14, the Governor included in her Supplemental Budget proposal language to make sales tax exemption applicable to all 501(c)(3) nonprofits in Maine. The state currently exempts most nonprofits from sales tax, but not all, making it an outlier in the northeast. Partnering with the Maine Association of Nonprofits and legislative allies, MCHT has been advocating for this change for more than a year.

In 2023, the legislature passed a resolve calling for a study, which the Mills Administration released in mid-January. The study calls for an extension of the sales tax exemption to land trusts and more than 5,000 other charitable organizations in the state. Among the report’s findings was the conclusion that making this change would:

(C)reate parity between organizations that have all been deemed by the IRS to be operating for a valuable public purpose, while reducing confusion, streamlining the process, and giving these organizations more time to devote to their important work.

If the legislature enacts this change to the state’s tax code, it will mean more resources available for land trusts to invest in our programs and lands to the benefit of Maine people.

Updating and Enhancing the Open Space Program

In 2023, LD 1648 was introduced with support from MCHT, The Nature Conservancy, Maine Audubon, and Maine Woodland Owners. Following a public hearing last fall where a few expressed concerns and raised questions, the Taxation Committee asked us to return in 2024 with more broad-based support. We have since expanded our outreach to include the Maine Forest Products Council, Maine Municipal Association, the Professional Logging Contractors, and various state agencies. This diverse group of stakeholders came together after months of discussion to unanimously support an amendment to the bill.

On February 8, a majority of the Taxation Committee voted in favor of our proposed changes to LD 1648. The amended bill is designed to strengthen the Open Space Law, which for five decades has encouraged landowners to conserve their land in exchange for more favorable property tax payments. If enacted, the Open Space Law will include a clearer process for determining property values, new incentives for climate and wildlife friendly practices, enhanced benefits for landowners, a more straightforward system for municipal oversight, and reimbursement to the towns for a portion of the reduced tax revenue.

Next Steps

While there is still much work to be done to move these legislative initiatives across the finish line, this recent success is very encouraging. Representatives Melanie Sachs and Amy Kuhn have been especially helpful as sponsors of sales tax exemption bills. Similarly, Representative James Boyle has been leading the effort to update the Open Space Law. We will be working closely with all three and the Mills Administration to build support for these proposals as they move through the legislative process.