To understand Maine’s Tree Growth program, you need to think of trees as a crop, just like corn or apples. But unlike food crops, trees take decades to mature to harvest. The value of a mature woodlot just before harvest can be substantial, but its value after harvest is negligible and remains low for decades. So Tree Growth spreads property taxes evenly over the lifetime of the crop.
The state of Maine, like many other states, has long recognized the necessity and desirability of encouraging landowners to practice good, long-term forest management. In 1953, the Legislature established the policy that forestland should be taxed on its productivity – on its ability to grow trees – rather than its potential value if converted to house lots or other developments.
In 1970, citizens amended the Maine Constitution to allow current use taxation, meaning timberland is assessed on how the land is being used, rather than how it could potentially be used. A special study committee was appointed, which resulted in the Tree Growth Tax Law, declaring that “the public interest would be best served by encouraging forest landowners to retain and improve their holdings of forest lands . . . in order to protect this unique economic and recreational resource.”
The Tree Growth program is one of four “current use” programs – along with Farmland, Open Space and Working Waterfront – enacted because it is in the public’s interest to encourage the preservation of farmland, open space, working forests and waterfronts.
These programs are available to eligible property owners through municipalities. Any change in land use results in significant penalties paid to the municipality. Every year municipalities apply for reimbursement from the state for 90 percent of the difference in valuation from local ad valorem forestland rates and the Tree Growth rate.
Taxing land only on its ability to grow trees removes some of the economic pressures to convert forestland to other uses. So these lands grow timber, which provide jobs, income and taxes, and offer tremendous recreational opportunities. The program also provides municipalities with a more dependable and stable source of revenues.