Washington County Towns Lose $170,000
In 1990 Property Tax Payments
On Lands in Federal Ownership

Moosehorn Manager Dispenses Checks in Publicity Campaign

The Downeast Coastal Press, Cutler, Maine, 1991.

Copyright © 1991; Erich Veyhl, All Rights Reserved

The U.S. Fish and Wildlife Service (USFWS) has recently promoted its annual Federal payments compensating for the lack of 1990 tax payments on Federally owned land to eight downeast towns and to the County Commissioners. Moosehorn Refuge Federal manager Douglas Mullen has made a series of appearances before local officials, reporters and cameras presenting government checks for thousands of dollars, but comparisons with local tax rates for equivalent undeveloped privately owned land show an estimated net loss to local towns of nearly $170,000 beyond the Federal payments. The loss is due to the fact that Federal payments are only partial compensation for the lack of property tax payments.

According to the USFWS Regional Office in Newton Corners, Mass. the agency's 1990 payments totaled $176,345 on what the government estimates as $25,133,600 worth of Federal real estate holdings of 27,528 acres at Federal Refuges in the county. The amount which the government compensates towns for lost property taxes on Federally owned Refuge lands is set annually by Congress independently of local tax rates. (See "How Federal Re-imbursement Works at Refuges".)

The estimated net losses range from $809 for 5 acres in Addison to $67,000 in Calais. Private landowners make up the difference through higher property taxes. Detailed comparison for all the affected towns are shown in the tables below. In the nine Washington County towns affected by three Federal Refuges -- Moosehorn, Petit Manan, and Cross Island -- local tax rates paid by private owners range from 1.6 to 3.9 times the rate just paid by the USFWS.

In the last two weeks, Mullen appeared at several official meetings and has dispensed checks ranging from $844 to $38,929, systematically publicizing the payments, which he called the "advantages of a Refuge in your back yard", and emphasizing the "dramatic increased revenues to area towns." Due to annual Congressional funding decisions and a recent revaluation of Moosehorn land, 1990 Federal payments here are 62% higher than last year's 1989 payments, resulting in less losses to towns for 1990.

Articles in the Bangor Daily News on April 24 and May 1 featured photographs of Mullen giving Federal checks to the Washington County Commissioners and the Calais City Council. The check for $35,951 to the County Commissioners in lieu of taxes in the unorganized town of Edmunds, however, has been challenged as improper because the county does not collect property taxes and is eligible for only a portion of property taxes collected by the state in the unorganized territories. See related article: Federal Windfall to County Illusory.

The $170,000 in 1990 financial losses to the towns due to Federal ownership at Refuges are estimated from 1990 assessed taxes reported by each town together with the 1990 state estimates of full market value. The resulting tax rate provides a comparison with the rate paid by the government on its estimated full market value of Federal land.

State valuations are usually higher than local valuations, and rates estimated from state statistics are conservative estimates of the tax losses since the lower town valuations result in even higher mil rates in comparison with the Federal payments. In some towns, tax officials argue that the higher state valuations are too high because they do not take into account the fact that much private shorefront land is unbuildable due to environmental prohibitions on land use.

The estimate for the tax losses is based on the assumption that the land, if it were privately owned, would have been taxed on its equivalent undeveloped state; the estimates do not try to anticipate further loss of taxes or economic benefits from improved land where limited development often leads to net tax advantages in sparsely populated rural towns.

In some cases, however, the Federal land, if it had remained in private ownership, would have been subject to alternate exemptions such as Open Space or Tree Growth. Open Space classification of land is subject to town defined criteria and results in a reduced tax rate at the discretion of the town, depending on how much residents choose to encourage open space. [July 2000 - the state has since set criteria guaranteeing tax reductions for land owned by preservation organizations and others who cooperate by putting easements on their own land.]

Classification of land as "Tree Growth" is subject only to state criteria and results in taxes based on reduced state valuations depending on the type of trees grown. Under recent state law, however, 90% of the tax loss to the town due to Tree Growth classification is now supposed to be re-imbursed by the state within limits related to average land values that depend on whether the town is coastal or inland.

The state's annual determination of "average value" need not reflect local market value, however, and some town officials complain that past Tree Growth tax reduction re-imbursements from state funds have been even more unpredictable and inadequate than the USFWS partial re-imbursements for Federal land. State officials contacted last week say the Legislature approved the "average value" approach because of the high cost of individual property appraisals.

USFWS 1990 partial reimbursements of $18,944 for its ownership at Cutler's Cross Island, for example, resulted in a net loss to the town of $13,737, but due to the extensive valuable shoreline, state re-imbursements -- despite the 90% compensation rule -- would have been even less if all of the land had been left undeveloped and classified as Tree Growth. If the land had remained in private hands, on the other hand, most observers expect that it would not have been left completely undeveloped; private development would have increased tax receipts, as calculations several years ago indicated for a development proposal at Western Head in Cutler which was later blocked by preservationists.

Some local officials, recognizing that the Federal government does not pay taxes, say the recent partial payments are better than nothing, but others see the recent USFWS "check-waving" publicity campaign over Federal payments to towns as an effort to win support for a stronger Federal presence in Washington County. The Moosehorn Refuge and its manager have been especiall controversial because of aggressive expansion plans to acquire another 2,700 acres from private land owners.

Robert Kord, former Cutler selectman and sponsor of a recent Town Meeting resolution against further loss of private land, bluntly called the USFWS payments and the associated publicity an "attempted bribe", and notes that Mullen revealed last year that he seeks more Federal land in Cutler also. Mullen later stated that the agency currently has no plans for the Cutler acquisition [July 2000 - the Virginia based Conservation Fund subsequently tried to give over 10,000 acres to USFWS, but the deal fell through and the land went into state ownership.]

Cutler's town meeting this spring overwhelmingly voted to oppose what it called further "encroachment" by government agencies and trusts after reviewing town records showing that 75% of Cutler land has already been taken either partially or fully off the tax rolls and that under 10% of the town is left for growth.

At a recent special town meeting called on another topic, Cutler selectman Cynthia Rowden accepted a check for $18,944 from Mullen, while other residents and officials questioned discrepancies in records on Federal ownership in the town (See related article: Controversy over Cross Island Ownership. Mullen had appeared at the meeting seeking a public forum in which to present the check.

How Federal Reimbursement Works at Refuges

The Federal Government does not pay taxes to local government on land it owns. For Federal Wildlife Refuges, the Federal Refuge Revenue Sharing Act authorizes Federal payments in lieu of lost taxes up to a maximum tax rate of three quarters of one per cent (.75%). Actual payments are less and depend both on the changing Congressional funding of the reimbursement program each year, and on estimated land values that are reappraised every five years by the USFWS.

According to the USFWS's Environmental Assessment for the Moosehorn expansion, annual Congressional funding yielded an actual tax rate of .44% (59% of maximum) in fiscal '87, .53% (71% of maximum) in fiscal '88, and .59% (78% of maximum) in fiscal '89. The 1990 payments last month were based on a Congressional authorization of 93 1/2% of the maximum, yielding a .7% tax rate -- a 20% increase over last year. The funds come from Federal taxes and fees.

While in some rural areas of the nation these re-imbursement rates equal or exceed the local tax rates for the lost property taxes, they are significantly less than the tax rates in Washington County towns with USFWS lands, where the 1990 rates -- based on 1990 state valuations and town tax assessments -- range from 1.2% in Meddybemps to 2.7% in Calais. The 1990 rate of 1.1% in Edmunds was set by the state for the unorganized territories.

In the 5 towns affected by the Moosehorn Refuge, Federal payments also increased this year due to a Sept. 1990 revaluation catching up with land value increases over the past 5 years. The cumulative increase in valuation, which takes affect beginning with the current 1990 payments, ranged from 26% in Calais to 144% in Edmunds. The Moosehorn lands must be next revalued by 1995. Cross Island Refuge in Cutler and Petit Manan Refuge in Addison, Milbridge and Steuben were last revalued in Sept. 1988 and are due for revaluation by the agency in 1993.

Federal Windfall to County Illusory

Washington County Commissioners expressed surprise when Moosehorn manager Douglas Mullen appeared a few weeks ago with an unexpected check for $35,951 and a "photo op" to publicize the event. The check, funded by U.S. taxpayers as partial compensation for lost property taxes on Federally owned land in the organized town of Edmunds, was nearly three times larger than last year's payment of $12,277.

It was also apparently paid to the wrong people. By Federal law, USFWS payments in lieu of taxes for Federal land is supposed to be paid to the unit of government that assesses and collects the property taxes. Unlike many areas of the nation, the counties in Maine do not collect property taxes.

Edmunds deorganized as a town when the Moosehorn took over much of its land and tax base in the 1930's. As part of Maine's unorganized territory, Edmunds taxes are now assessed by the state, which then grants a portion to the County for its budget.

Last year, according to the State Bureau of Taxation, the state collected $1,063,012 from unorganized territories in Washington County. Of this 13% -- $138,261 -- was provided to the county budget shared by all towns. An additional 31% -- $334,015 -- was paid for county services to unorganized territories such as Edmunds. The remaining 56% remained for state expenses, such as education, in the unorganized territories.

Washington County Commissioners had probably in their imagination spent what appeared to be a Federal windfall several times over, but the State Bureau of Taxation says that it is familiar with the issue and that it has reminded the Commissioners that a portion of the USFWS payments will have to be deducted from state payments to the County.

Controversy Over Cross Island Ownership

Federal Ownership In Cutler
Higher Than Previously Believed

Another preservationist controversy broke out in the beleaguered town of Cutler last week when selectmen discovered a discrepancy between town tax records and USFWS claims of Federal ownership.

The USFWS said it owns 1,703 acres at the Cross Island Refuge in Cutler. Town tax records, however, indicated only 165 acres in Federal ownership in the Refuge -- at Cross Island's Northwestern Head -- with another 1,396 acres owned by the Nature Conservancy (TNC).

The town had never received records of the Cross Island land transfer to the USFWS, but last week tracked down a deed showing only 1,355 Federal acres at the Cross Island archipelago which had been transferred from TNC to the USFWS in 1980.

The USFWS Regional Office in Mass. explains that TNC donated an estimated 1,355 acres on July 3, 1980 which was subsequently re-surveyed as 1,538 acres. A land swap with TNC on July 29, 1987 resulted in a 165 acre addition to the Cross Island Refuge for a total of 1,703 acres.

The 1,538 acres had been donated to the government in 1980 through TNC by the wealthy Cabot family of Boston.

The Cabots retain on Cross Island to this day two exclusive shorefront lots of about 20 acres just outside the Refuge at Northeast Harbor where they overlook the Cutler coast. According to a 1980 article in the Machias Valley News Observer, the Cabots bought the Cross Island archipelago in 1941 for "about $1 an acre."

The Cabots, along with the Rockefellers, also co-founded the Maine Coast Heritage Trust to preserve the Maine coast in 1970 after, according to the April 1991 Down East magazine, they noticed from their yachts that more homes were being built near the waterfront.

Prior to the Cabot ownership which eventually led to the wildlife preserve, Cross Island, like much of the downeast coast, had been more populated than it is today and had traditionally been the site of several Cutler homesteads. According to Robert Kord's 1985 Down East to Cutler, The History of a Maine Town, the island even had its own school, several homes, fish houses, and a U.S. Life Saving Stations in the mid 1800's.

Detailed Comparisons
Property Tax Valuations, Local and Federal Tax Rates,
Federal Underpayments and
Losses to Local Property Tax Payers
in Washington County

Local Valuations and Rates
Town State Valuation
of taxable private
land for 1990
Tax Assessment
on private land
reported by
towns for 1990
1990 tax rate
on private land
(per cent)
Petit Manan Refuge
   Addison $35,650,000$490,9481.38%
   Milbridge 45,950,000630,1711.37
   Steuben 34,300,000463,9191.35
Cross Island Refuge
   Cutler 14,700,000191,6701.30
Moosehorn Refuge
   Baring 4,950,00062,5551.26
   Calais 74,100,0002,007,218 -a2.71
   Charlotte 9,050,000161,3591.78
   Edmunds -b 6,612,45072,274 1.09
   Meddybemps 6,300,00077,9551.23
Total $231,612,450$4,158,0691.80% (ave.)
  a - Calais tax year is 7/1 - 6/30. This number for 1990 is
       average of years ending 6/30/90 and 6/30/91.
  b - Edmunds is taxed by state as unorganized territory.

Federal-Local Tax Rate Comparison
Total Acres-Valuations
Town Ratio of town tax
rates to USFWS
Federal rate (.7%)
used for 1990
Petit Manan Refuge
   Addison197%5 acres$120,200
Cross Island Refuge
Moosehorn Refuge
Total256%(ave.) 27,528 acres$25,133,600

Federal Underpayments
Losses to Local Taxpayers
Town USFWS 1989
USFWS 1990
payment (made
last month)
Estimated 1990
Tax Loss to
towns on
USFWS land -c
Petit Manan Refuge
   Steuben32,399 38,929 -31,086
Cross Island Refuge
Moosehorn Refuge
  c - Tax losses show the dollar equivalent of the difference
        between town tax rates and the lower USFWS rate.
        Losses are estimated as the amount taxpayers would
        have saved if USFWS land had been taxed as private
        undeveloped land, using USFWS land valuation, to
        raise the same total revenue (taxes + USFWS payments)
        in 1990 (except in Edmunds where the State sets the
        tax rate.) Actual amounts would depend on inter-
        action between budgets in successive years and taxes
        for other land uses which might have occurred if
        Federal land had been private, such as increased
        value of developement, town open space exemptions,
        and state tree growth reimbursements.