Trees are money in Maine. For centuries, farmers have set aside stands to serve as insurance policies. Sold to the local mill, the trees paid for a man's funeral of pulled the family through hard times.

But a special law designed to let farmers hold on to their tree-growing property is creating a tax crisis here and in other small, northern Maine communities.

The small towns are suffering because the tree-growth law has shifted the municipal tax burden from the giant paper companies that dominate this region to the homeowners who work in the pulp and paper mills.

In Troy, Head Selectman Phillip Paton said the five-year-old tree tax law has doubled and tripled the taxes homeowners pay. The year-round residents of Troy have had to pick up the tax slack created when tree classification was enacted.

The 1973 law allows individuals or corporations holding 10 or more acres of lands to classify it as "tree growth property." The growth property is valued from $25 to $50 an a cre depending on the kinds of trees on the land. Hardwoods are valed higher than softwoods.

Since the law was enacted, property once assessed in the thousands of dollars may now be worth only a few hundreds dollars, said Paton. "So we're screaming pretty loud. There are a lot of towns up here that are hurting. So I've been appointed a kind of regional complainer."

Soon more that 75 percent of all the property in Troy will be tree land, said Paton. "The world is out to get on the bandwagon. "The world is out to get the bandwagon. In our town, 6,400 acres are under trees. That's 4,000 more than last year." Paton added that 18,000 of Troy's 24,000 acres soon will be valued at $50 or less.

"Now the people who live here are not rich." he said. "They make an average who work in the mills and cut the trees. These little people cannot carry the tax burden all by themselves."

The paper companies, which recently announced Maine is the biggest paper-producing state in the nation, have been quiet on the tree-tax issue. However, one paper executive says the industry is so important to Maine that the tree-tax law will not be scrapped.

"The aim of government is to promote the welfare of all, the majority," said Russell Day of the S. D. Warren Paper Co. "When that happens, somebody usually gets stepped on."

In the case of the tree tax, the "somebodies" are the small towns in paper country.

David Cota, town manager of Brownsville, said "we've got no tax base now." Cota claimed the tree tax law "has thrown the tax situation in towns like ours into chaos." He added, "We've lost our tax base, and it's the small property owner that's getting nailed."

While the tree tax law has hit northern communities hard, it has served to limit growth in the south. The more developed southern part of the state has been grappling with population and building boom for more than a decade. Pastures have been plowed over for shopping malls and housing projects. The tree law has allowed property owners in southern Maine to resist selling land for development.

The Maine legislature will wrestle with the tree-tax problem when it convenes in January. States Sen. Phillip Jackson said he will try to work out a compromise measure that will increase the value of tree-growth property but retain the protection the law affords southern tree growers.

Jackson, chairman of the Senate Taxation Committee, said, "There's a tremendous problem in the northern counties. Many of these properties are owned by out-of-states who buy the land for recreation purposes. They could afford to pay taxes."

Besidses raising the value of tree-growth land, Jackson expects the legislature will amend the law to require that tree land "be actively managed." Active management means the tree must be harvested periodiclly and carefully planted to assure continued production will raise the maximum acreage requirement so the property owner who wants to protect a small tract that he plans to develop will not escape taxes.

Meanwhile, the 543 people of Troy will have to wait for a solution. The way they see it, they are carrying the big paper companies. "That's got to stop," said Selectman Paton. "And doubling the value of that land will just about do it."