Maine lawmakers still distant on how to solve $880M shortfall

AUGUSTA — With fewer than 100 days left in the state's fiscal year and a June 30 deadline for a balanced budget looming, Maine lawmakers are far from agreement on how they will settle an $880 million budget gap.

Troy R. Bennett/Bangor Daily News

The State House in Augusta, as seen Monday, March 11, 2013.

Many expect the debate on the state's $6.3 billion budget and how to fix that 14 percent shortfall to drag well into June.

Others say a bipartisan deal that two-thirds of the Legislature can agree on will be worked out in time to avoid a government shutdown.

House Minority Leader Ken Fredette, R-Newport, said he is learning new ways to say "government shutdown" as he is roundly criticized — largely by Democrats — for suggesting that a budget impasse could occur.

Off the record, some Democrats agree that a shutdown is not beyond the realm of possibilities.

The last time state lawmakers failed at a budget and state government closed its doors temporarily was in 1991. 

A pair of tax-relief bills, both of which were left on the table in the Maine House of Representatives on Thursday, help illuminate just how far apart Democrats and Republicans are when it comes to the "t" word — taxes.

One of the bills, offered by Democrats, would increase the earned-income tax credit for low- and middle-income wage earners. The other, offered by Republicans, would lower the state's capital gains tax by about $40 million. But neither bill would address the projected budget shortfall. In fact, if passed, they would increase the revenue shortage.

"There's no doubt in my mind that we will have to do revenue-raising," said state Sen. Margaret Craven, D-Lewiston. Craven said she would consider a variety of tax increases, including temporarily increasing the state's sales tax or temporarily freezing income tax cuts that were enacted in 2012.

Other tax changes could include increasing sales taxes on cigarettes or expanding the tax on tobacco to include small cigars and smokeless products. Those proposals would raise an estimated $50 million, Craven said. 

One or a combination of those increases would be a "better bargain," Craven said, than the budget offered by Republican Gov. Paul LePage, which partially fills the shortfall by eliminating about $250 million of state revenue-sharing to cities and towns.

It's a provision that both Republicans and Democrats say they have a hard time swallowing as selectmen, mayors and city councilors back home are saying the reductions would devastate municipal budgets or force property taxes upward.

Craven said her income tax break adds up to $19.95, but proposed reductions in state funding or revenue-sharing for public schools and local municipalities means her property taxes would jump by more than $500. 

"It isn't working; it's silly, really," Craven said.

But conservatives will say what's silly is that the state continues to spend beyond its means.

"The reality is at the end of the (Gov. John) Baldacci administration, the same problem existed," said Sen. Michael Thibodeau, R-Winterport. "We had a government that had grown to the point that we couldn't afford to fund it."  

Lawmakers used one-time federal stimulus funds to solve that budget shortfall, but the underlying structure is still a government that cost more to run than it collects in revenue, Thibodeau said.

"We are still faced with the same really tough choices about where we can reduce the size of our government," he said.  

Thibodeau and other leaders in the minority said Thursday they were concerned about the pace of action on the budget and the substance of other bills Democrats have advanced.

"Generally, Republicans are not happy with the priority of the Democrats, the petty bills," said David Sorensen, spokesman for House Republicans. "And we are waiting for them to present their alternative on the governor's budget — the biggest issue of the entire session —  and they have not presented a single solution."

Bills to sell the governor's mansion, to revoke his pension and to prohibit teenagers from using tanning booths are among the measures Sorensen lists as "petty."

His counterpart, Jodi Quintero, the communications director for House Democrats, said a bill to protect teens from cancer isn't petty.

Quintero said the pace of progress on the budget is on track and matches nearly identically the pace Republicans took when they held the majority two years ago. She said talk of a government shutdown is overblown rhetoric and unproductive.

"We are working together; the committees are doing bipartisan work every day," Quintero said. "We are still in public hearing." Quintero said many ideas on solving the budget gap are moving around, but they won't advance until the public hearings on the governor's proposed budget are done.

"You never close the budget before the public hearings are done," Quintero said.

She said that while the bulk of the Legislature will take a break in mid-April, the Appropriations Committee will continue its work.

Senate President Justin Alfond, D-Portland, said both parties and even the few independent lawmakers in the Legislature are offering bills that look at raising new revenues. Alfond said most of those bills will be heard soon and would be clumped together so the public could follow along.

Even LePage's budget proposal, which eliminates indexing on the income tax, raises new revenue, legislative leaders are quick to point out.

House Majority Leader Seth Berry, D-Bowdoinham, is sponsoring a bill he calls the "Buffett Rule" — named for billionaire Warren Buffett, who has suggested the most wealthy should be taxed more.

Berry said the measure requires those earning $250,000 or more to pay at least what the middle class pays in state and local taxes. The measure would raise an estimated $200 million, according to Democrats.

Berry's bill, which hasn't been scheduled for a public hearing – legislative leaders said they expect it to be heard sometime in mid April.

At least one Republican also has a bill that would increase income taxes for those earning more than $250,000. Sen. Tom Saviello, R-Wilton, said his bill would raise $5 million and would affect about 4,100 taxpayers in Maine.

Saviello said the bill, which is sponsored in the House by Rep. Terry Hayes, D-Buckfield, is the result of conversations with constituents in his district.

"If you look at a lot of the bills that I sponsored this year, they are a real reflection of what people talk to me about and this is one," Saviello said. "I felt to be true to myself and what I do here, I need to do that. I've taken a little bit of grief, but it doesn't matter. That's who elected me."

Rep. Gary Knight, R-Livermore Falls, the lead Republican on the Legislature's Taxation Committee, said the committee has been able to quash bills that cost the state money. He said he liked several of those bills, including one that would have provided tax credits to performing arts organizations.

"It was a good bill," Knight said. "We are not questioning the integrity or the credibility of these bills. The problem is we don't have the money to be having additional tax expenditures."

Knight said bills that increase taxes or raise revenue have been few and far between. "They're out there; they're coming," he said.

sthistle@sunjournal.com

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Comments

FRANK EARLEY's picture

I still can't figure this out.....

I read this story two or three times. Maybe I'm missing something, maybe I just don't get it.
What is the big problem with forcing the highest earners to pay at the same rate as us "peons"?
I never had a problem with my income taxes going up every time my earnings went up. It was expected, The problem I have with that little mathematical equation, is that yes, the size of the tax bill goes up with higher earnings. On the other side of the coin, it doesn't seem to work that well in reverse.
When I was able to work, it was expected, My pay scale changed often over the years. I paid the going rate and that was fine. When I was forced to stop working I was making more than ever before. As a result I took an eighty-five percent cut in earnings, to where I am now, and always will be. I can't go to school, to earn another degree, I can't work overtime to earn some extra money. I am basically grounded. My only other form of income is trading and selling stocks. I have to be careful, unlike earning a healthy living, when your disabled you lose your ability to earn beyond a certain amount without it affecting your benefits. Its very frustrating, but what am I going to do. To me, it's just a bit more than a hobby. Until, I sell my stocks. Then it becomes real. I have to pay taxes on any profits I collect. Do I get any breaks because my annual income is next to nothing? No, I am taxed at the same rate I was, back in the six figure category.
How is that? If I kept going I would have eventually reached a point where my income tax rate would not come close to my actual income. Which in effect is a great boost to my bottom line. It would be just like getting that annual bonus check three or four times per year. No wonder I would have been so protective of my money. I would probably need to switch to the Republican Party, That of course is akin to hiring a new security guard at the bank.
It doesn't seem to work as well going the other way. I take an eighty five percent pay cut, Everything else stays the same, I still need to pay all the same bills I had when I could afford them, but wouldn't you know? when I pay my profit tax on stock sales, I'm paying at he same old rate. Problem is I have no support group like the Republicans to watch my back. When in reality, your making next to nothing, your on your own.
I say this, If I am forced to pay at the same rate as when I had a decent salary, then the "Rich" can part with a few extra greenbacks as well. Why the hell do they receive protection, while the rest of us are swimming up stream with our legs tied together? Stop treating the rich any differently than the rest of us. Tax them, and quit cowering in their presence. Trust me their not going to break.

Mike Lachance's picture

SPENDING SPENDING SPENDING

As has been noted, cut spending and you eliminate the shortfall. This seems to be lost on Democrats from Augusta to DC. Until they "find" this, we are bound to fiscal failure.

 's picture

Just keep Baldacci out of

Just keep Baldacci out of anything to do with Maine

RAYMOND FRECHETTE's picture

Mr. Savard is correct in

Mr. Savard is correct in saying that raising taxes will only cause high earners to seek lower taxing States as home. Maine is losing out here. Maine has simply got to learn to live within its means. This means simply that you do not spend more than you take in. Where Maine is already noted for being one of the highest taxed States in the nation Maine legislators have to wake up and realize they have squeezed all they can from the tax payers.

GARY SAVARD's picture

Taxing the most wealthy to

Taxing the most wealthy to balance the budget sounds good on paper, but how many of those people actually HAVE to report Maine as their primary residence? I would guess that quite a few of them can do what they do in a more tax friendly state.The core problem, which has been around for years, is that Maine government spends more than it takes in. At some point, even Margaret Craven will have to realize that we can't just keep raising taxes and raising taxes to fix a problem that will not go away until we spend less. Working people and retirees are falling behind little by little every year as it is. Everything, from food to transportation to medical services is going up faster than wages and pensions. Raising any kind of tax will only add to this problem. Quite a lot to think about.

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