Havens: Let My Island Go

By JANE COSTELLO

New York Times, November 5, 2004

IN many ways, the small town of Islesboro , Me. , is a place divided. The thin, figure-eight-shaped island community in Penobscot Bay , a half-hour ferry ride off the Maine coast, is a summer getaway for wealthy second-home owners, some of whom arrive by private jet. Geographically, it's split by an area called the Narrows, with the summer people, who number about 1,400, drawn to the village of Dark Harbor, on Islesboro's southern end. Most of the 600 permanent residents live "up island," near Pripet , historically home to Islesboro natives.

But this fall, Islesboro's residents, full- and part-time, are united as never before behind one goal: seceding from mainland Waldo County , which they maintain is bleeding them dry with property taxes.

Indeed, during the last few years, coastal homeowners in Maine have watched their tax bills soar, with most waterfront property owners paying at least twice as much as they did five years ago. Islesboro's share of county taxes, determined on the basis of property values, has increased 46 percent since 2002. "For years the figure didn't change much at all," said Marnie Diffin, a full-timer and Islesboro's town manager. "Then in the last four years, it went crackers."

And even if the "summer money" can afford the increase, many second-home owners say they don't want to overpay for the privilege of being part of a county they say supplies the island with minimal services. "Summer people pay a lot of taxes, and right now there's a perception that we're not getting our money's worth," said David Blanton, a Californian who has summered on Islesboro for the last 20 years. Mr. Blanton's taxes on his Seal Harbor home went up 30 percent this year. "We have our own school and our own fire department. We're pretty self-sufficient."

In January, residents established a five-person committee to study the issue. By the spring, a full-blown secession movement was under way. In September, Islesboro's board of selectmen voted 4 to 1 to secede from Waldo County , which relies heavily on the island to beef up its tax revenue, and join wealthier Knox County . Waldo is one of the poorer counties in Maine , with its residents making 11 percent less per capita than the state's average of $19,533 a year. And while there are 27 towns in the county, taxes paid by the city of Belfast , Waldo's biggest municipality, and Islesboro account for 35 percent of the $5.2 million budget. Inland towns, where property values remain relatively low, pay a much smaller share.

Knox County , by contrast, has affluent coastal towns, including Camden and Rockport, as well as the island of Vinalhaven , contributing to its tax base. Backers of Islesboro's secession movement claim that the island's county taxes would be cut nearly in half if it joined up with Knox, because other comparable towns would be helping to carry the tax burden. "We've got to do something," said Valli Durkee, the owner of the Bee's Knees Cafi in Dark Harbor . "A normal person can't afford to live here anymore."

ISLESBORO is only one of a growing number of vacation-home spots that are rethinking their allegiances. The secession movement is by and large a bit of unexpected fallout from the rising real estate market for second homes, which has driven up vacation area property values in a relatively short period of time. According to the National Association of Realtors, 2003 was a record year for second-home purchases, with sales increasing to 445,000 from 359,000 in 2001. Demand has pushed prices up, too, with taxes often following suit.

Now, a number of towns are saying they've had enough. In Killington , Vt. , for example, where nearly 80 percent of the homeowners are part-timers, some residents made headlines earlier this year by suggesting the town secede from Vermont in favor of more tax-friendly New Hampshire . At issue is a state law that established two property tax rates to finance education, one for primary residences and a second, higher rate for vacation homes.

The secessionist movement isn't just a New England phenomenon. For the last four years, Avalon Manor, a tiny island off the coast of central New Jersey , has been struggling to de-annex itself from Middle Township and join Avalon, a bigger island connected to Avalon Manor by bridge. Manor residents claim Avalon is better equipped to provide fire and rescue services, and that the town's relationship with Middle Township exists only because of a 200-year-old statue that randomly assigned barrier islands to the townships. So far, Middle Township has prevailed in the courts, though Avalon Manor is planning an appeal to the New Jersey Supreme Court.

Determining what constitutes a fair share of taxes is at the center of many of these disputes, since second-home owners or the smattering of full-time residents in seasonal areas rarely get back in services what they pay in tax increases. Vacation-home owners mostly don't use the public schools, don't benefit from winter road clearing and don't need their trash picked up nine months of the year. Full-time residents of an island often feel neglected by a distant mainland government. "Municipalities look at these islands as cash cows," said Jim MacElree, a Pennsylvania county judge who owns property in Avalon Manor. "Our property taxes generate significant revenue but we get very little in return."

Middle Township officials argue that losing Avalon Manor's tax revenue, which is close to $1 million, would be detrimental to the county as a whole, and say that the town is provided with adequate services. "They've been part of Middle Township for a couple of hundred years, and we want to keep it that way," said Jim Pickering, Middle Township 's solicitor.

In most cases, the secessionists are in for a long and ultimately frustrating fight. For Islesboro's breakaway to succeed, residents must find a representative willing to introduce the secession bill to the state legislature. All parties must agree on the outcome: Knox County must vote to accept Islesboro, Waldo County must vote to let Islesboro go, and the State Legislature must approve the deal. None of which seems very likely. "Secession isn't the answer; it's insupportable to have towns floating in and out of counties," said Carol Weston, the state senator from Waldo County . Not surprisingly, she has refused to sponsor the secession bill. "The issue is that Maine relies too heavily on property taxes to finance the schools; the state needs to shoulder more of the costs."

According to the Census Bureau, Maine is ranked 33rd in the country in per capita income, but second - behind New York - when calculating the state and local tax burden as a percent of personal income. By state mandate, Maine communities are limited to using property taxes to pay for the vast majority of municipal services and for public education. The burden falls disproportionately on those who can least afford to pay it, said Senator Weston. "The tax system we have in place is now forcing people who've lived here for generations to either pay huge increases or to sell their property. It isn't sustainable."

John Hyk, a Waldo County commissioner, nevertheless is sympathetic to the island's complaints. "Islesboro keeps getting whacked because the land gets more valuable there every year," he said. "But Waldo doesn't want to let them go - they're the wealthiest town in the county." Mr. Hyk said that reluctance to redraw county lines extends to the state level, where representatives are loath to sponsor legislation that would encourage other wealthy waterfront towns to think about changing allegiances.

"The legislature is afraid that if they open the gate, every town will be shopping around for the best deal," he said. "Then the rich would get richer and the poor would get poorer."

But residents of other Maine islands have successfully seceded. Long Island, located in Casco Bay off Portland , seceded from the city in 1992 after a property revaluation that doubled, and in some cases, quadrupled property taxes. The most recent example involves tiny Frye Island , a 1,000-acre island in the heart of Sebago Lake , which successfully broke away from the neighboring town of Standish and established its independence on July 4, 1998.

Frye Island has about 400 summer cottages but no year-round residents. For years, homeowners paid taxes to the town of Standish , including money to support the regional school district. By 1995, it became apparent to Frye Islanders that they received almost no services in return for their tax money and that it would be more economical to set up their own town. Unlike other communities, which face an uphill battle trying to take back their tax dollars, Frye Island homeowners were able to persuade both Standish and the state legislature that secession made sense because of the island's remote location.

"It was unbelievably difficult for Standish to provide any services to us," said Joe Potts, who became the island's first selectman. "It took forever to get anyone out here to do road repairs or other things we needed done. For years and years, we paid Standish and got nothing." 

But the secession was not a complete break. As part of the deal, Frye Island agreed to remain part of the regional school district, despite the fact that it sends no students to the public schools. Since the town incorporated in 1998, its share of the school tax has risen to $900,000 from $300,000 and homeowners are once again grumbling about paying disproportionately for services they don't use.

But even if Islesboro does eventually succeed in breaking away, it won't be without a long - and pricey - fight. Judge MacElree, of Avalon Manor, estimates that it has cost secession-minded homeowners there between $100,000 and $250,000 to fight their battle over the last four years. "You need to hire a good lawyer, and do lots of fund-raising," he said. "Because one thing is certain: The town will battle back and use your own tax dollars against you."