LEWISTON — The best thing state leaders could do for Lewiston-Auburn property owners is leave the Homestead Exemption program alone, according to officials from both cities.

Auburn City Manager Clinton Deschene and Lewiston City Administrator Ed Barrett said they’re nervous about proposed changes to the state program, which is designed to give a property tax break to year-round Maine residents. It allows them to exempt the first $10,000 from their property tax calculations.

Proposals by Gov. Paul LePage and a group of legislators seek to change the exemption: LePage would eliminate it while legislators would expand it.

“There are a lot of moving parts in all of these tax proposals, and there are things that impact different classes of taxpayers differently, with offsets for different groups that balance each other out,” Lewiston’s Barrett said. “But if the homestead goes away, taxes go up because there is no offset for those.”

LePage’s proposed budget would do away with the exemption for anyone younger than 65. That would mean a $214 property tax increase for everyone else in Auburn that has received the exemption in the past.

“I’m afraid of what I’ll have to tell my taxpayers,” Auburn’s Deschene said. “They’ll want to know what we’re doing with that increase on their tax bill, but it’s not money we’re getting. It’s not a tax increase, just the ending of a state program and there really is nothing we can do about it.”

Barrett said LePage’s proposal would increase homeowner property taxes by $237 in Lewiston.

A counterproposal by a group of 11 state legislators would take the program in the other direction, increasing the exemption to $50,000 for year-round residents.

Deschene said that could mean a $1,000 tax cut for Auburn’s year-round homeowners, shifting that difference on to local businesses and rental properties. Barrett said that could amount to a 10 percent tax increase for Lewiston businesses.

“If you have a large apartment complex, the Homestead (Exemption) has no impact on them now,” Deschene said. “But this would.”

Maine has had a Homestead Exemption since 1998. According to the original rules, the first $7,000 was exempted from property tax calculations. The state made up the difference, paying the lost revenue back to the cities and towns.

“But it’s changed a lot since it was first adopted,” Deschene said. “It’s been increased and decreased and the state rebates only half of the exemption to the cities now.”

A proposal debated by the Legislature’s Taxation Committee would delay changes to property tax benefits — the Homestead Exemption and the circuit breaker rebate for low-income residents — until 2015.

“We’re concerned about the overall impact on the taxpayer, whether they are homesteaders or not,” Barrett said. “The governor’s proposal, and everything in it, would have a significant impact on everybody. The city in total is looking at losing between $4 million and $4.5 million. Absorbing those kinds of reductions now, after years of reductions, is pretty hard.”

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