Sec. 1. 36 MRSA §683, sub-§§3 and 4, as amended by PL 2005, c. 2, Pt. F, §3 and affected by §5, are further amended to read:

3. Effect on state valuation. Fifty percent of the The just value of homesteads exempt under this subchapter must be included in the annual determination of state valuation under sections 208 and 305.

4. Property tax rate. Fifty percent of the The value of homestead exemptions under this subchapter must be included in the total municipal valuation used to determine the municipal tax rate. The municipal tax rate as finally determined may be applied to only the taxable portion of each homestead qualified for that tax year.

Sec. 2. 36 MRSA §685, sub-§2, as amended by PL 2005, c. 2, Pt. F, §4 and affected by §5, is further amended to read:

2. Entitlement to reimbursement by State; calculation. A municipality that has approved homestead exemptions under this subchapter may recover from the State 50% 100% of the taxes lost by reason of the exemptions upon proof in a form satisfactory to the bureau. The bureau shall reimburse the Unorganized Territory Education and Services Fund for 50% 100% of taxes lost by reason of the exemption.

Sec. 3. Appropriations and allocations. The following appropriations and allocations are made.

ADMINISTRATIVE AND FINANCIAL SERVICES,

DEPARTMENT OF

Homestead Property Tax Exemption Reimbursement 0886

Initiative: To increase the reimbursement to municipalities from 50% to 100% of the increase in the homestead exemption to $13,000.

GENERAL FUND 2005-06 2006-07

All Other $35,438,172 $36,267,826

__________ __________

GENERAL FUND TOTAL $35,438,172 $36,267,826

Sec. 4. Retroactive application. This Act applies retroactively to property tax valuations determined on or after April 1, 2005.