Maine budget deal would boost sales, meals and lodging taxes

AUGUSTA — Lawmakers propose to temporarily increase the sales tax by a half a percent and the meals and lodging tax by 1 percent in order to balance the state budget for the next two years and blunt some of the cuts proposed by Gov. Paul LePage.

File photo

The Legislature’s Appropriations Committee recommends a budget that would increase the sales tax by a half a percent and the meals and lodging tax by 1 percent.

Budget numbers

The proposed biennium budget ends June 30, 2015 and would increase revenue $178 million by:

  • Increasing sales taxes by .5 percent
  • Increasing meals and lodging taxes by 1 percent

These tax increases would end at the end of the budget in 2015

The increased revenue would be used to:

  • Restore $125 million of the $200 million cut from municipal revenue sharing.
  • Give raises to state employees and spend almost $9 million over the biennium to restore longevity and merit pay for state employees
  • Restore the $9.1 million homestead exemption program.
  • Replace the circuit breaker program with a $29 million “property tax fairness” exemption that will kick in automatically when people file their state taxes.
  • Restore funding for low-cost drugs to the elderly.
  • Restore funding for Head Start; Women, Work and Community; and other job training programs.
  • Restore $33 million to K-12 education.
  • Use $13 million in casino revenue to help municipalities pay their half of teacher retirement costs — which was proposed by the LePage administration.
  • Add 1 percent to the state’s share of essential programs and services in 2015.
  • Allow about 3,100 disabled Mainers to be moved off a waiting list for Medicaid.

The tax increases were supported early Friday morning by unanimous votes of the Legislature’s Appropriations Committee, which convened in public session at 5:30 a.m. after negotiating through the night. The $178 million in revenue generated by the tax increases, which are set to sunset in June 2015, will allow lawmakers to restore $125 million of the $200 million suspension of municipal revenue sharing proposed by Gov. Paul LePage and give raises to state employees who haven’t seen pay bumps in more than four years.

The committee’s decisions on Friday constitute recommendations to the full Legislature, which seeks to enact the budget prior to adjournment on June 19.

Committee members also opted to reverse LePage’s proposed cut of the homestead exemption program and replace the circuit breaker program with a “property tax fairness” exemption that will kick in automatically when people file their state taxes. Other programs for which funding was restored by the committee include the low-cost drugs to the elderly program; general assistance; Head Start; Women, Work and Community; and other job training programs.

“These are programs that are very important to us and we were glad we were able to put some money into them to keep them strong,” said Rep. Peggy Rotundo, D-Lewiston, who co-chairs the committee..

The committee also approved spending more on public education to bring funding to the level it was in the current biennium before LePage cut $35.5 million from the overall budget late last year due to the slack economy. The additional education funding will be accomplished by reversing a proposal by LePage for municipalities to pay half the cost of teacher retirement plus adding $13 million in casino revenue to general purpose aid to education.

Sen. Emily Cain, D-Orono, moved language into the budget bill that requires the state to add 1 percent to the state’s share of essential programs and services in 2015. EPS is the formula that’s used to fund public schools. Cain said the initiative is meant to move the state toward funding 55 percent of the total cost of K-12 public education.

The committee also approved spending nearly $9 million over the biennium to restore longevity and merit pay for state employees

“I think this goes a long way to acknowledging the challenges of recruitment and retention in the state workforce,” said Cain. “We recognize that it’s not everything but it is a step in the right direction.”

The budget compromise represents a victory for Democrats who were told by Republicans over the past few days that tax increases would not have their support. It still must gain two-thirds support in both chambers of the Legislature to be enacted by July 1. LePage also could veto all or portions of the budget.

“I know this has been a very tough budget for all of us,” said Rep. Katherine Chase, R-Wells, who on Wednesday said her caucus would not support tax increases. “It’s painfully apparent that the economic woes haven’t really gone by the wayside and we’re still in the midst of them. As a result we have to deal with cuts and some of them after this many years are no longer acceptable. … I would hope that the people of Maine would understand that you’re helping the elderly keep their drugs, helping the good employees of the state of Maine get recognition for their good work and giving funding back to the towns that we all come from so that property taxes won’t increase as much as they would have.”

The committee planned to convene later Friday for final votes on the budget bill.

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Comments

PAUL ST JEAN's picture

I suppose some democrat will

I suppose some democrat will consider it a good idea to exempt tourists from the sales tax increase so as to promote tourism.

JERRY ARIPEZ's picture

About

as smahhrttt as your comment....

PAUL ST JEAN's picture

My little innocuous comment

My little innocuous comment offended your little sensitivities, did it?

JERRY ARIPEZ's picture

I wanted

to ignore you like a child playing with his poop, but then you disseminate that same out your mouth and it needed cleaning up....

PAUL ST JEAN's picture

I can walk into an empty room

I can walk into an empty room and not get into a fight. YOU CAN'T.
Go bother someone else. I don't need your argumentative drivel.

JERRY ARIPEZ's picture

I'm not arguing

I'm testing how far before you erupt and it won't be necessary to push that button to achieve that effect.

PAUL ST JEAN's picture

Good. Hold your breath while

Good. Hold your breath while you're waiting. Might be an effective way of getting rid of your sorry bully ass.

JERRY ARIPEZ's picture

Goes around --comes around friend

"offended your little sensitivities, did it?"

PAUL ST JEAN's picture

Whoa....now we're getting

Whoa....now we're getting creative. Why don't you go hold a union meeting or something. I can't seem to find my fly swatter, so I can't squish you away. I know, I'll just activate the IGNORE key.

JERRY ARIPEZ's picture

Sure

Right after the repubs put a star on their garments and tattoo their arms....to separate them from Mainiacs...

PAUL ST JEAN's picture

You're smaaahht.

You're smaaahht.

DONALD FERLAND's picture

And our illustrious governor

And our illustrious governor in all his wisdom (said sarcastically) has just stated he will veto any budget that raises any taxes....what does he think his proposal will do...his proposal will raise property taxes....at least with the proposal out of appropriations taxes will also be paid by the tourists and not just Mainers....how long before he can just go away again?

JERRY ARIPEZ's picture

Half Pennies amounts to a lot of Cashola

$101 million half cent tax passes MN House...

Nothing wrong with revenue that cost only pennies...

On November 6, 2012, the citizens of Rochester will have the opportunity to reauthorize the half-cent local sales tax, a significant benefit to the community that has been in place since the initiation of the highly successful flood control project in 1983.

Over the years, this revenue has supported several capital projects in the community that otherwise would have needed funding from local property taxes.

Great way to get the city fixed.....it is a no brainer, except by those that want to make it so that you are killed by a thousand cuts.

JERRY ARIPEZ's picture

Baggers Philopshy

We don't need no stinkin' revenue we just keep cutting into an austerity moment and make everyone pay, hard and crash the economy and put more on the streets......

Lepage knows how it was having nothing so he wants everyone to have the same as he did, paying back society for his shortcomings....

LA needs money, so lets keep them shutting down services and let the community go without proceeds to prevent the city for success, since revenues stifle growth .

PAUL MATTSON's picture

Just what New Hampstah

Just what New Hampstah ordered.

Steve Bulger's picture

Whaaaat?

What does a half-cent sales tax in Minnesota have to do with NH?

PAUL MATTSON's picture

The article is about Maine's

The article is about Maine's proposed tax hike.

JERRY ARIPEZ's picture

Connect the dots

I am showing you since the 80's Rochester has renewed it each election cycle...it has been successful to raise monies without having to increase property taxes....it is a proven litmus and not just an unknown for deniers to open their eyes to....

State is irrelevant, it is a proven technique to success of developing your community....

JERRY ARIPEZ's picture

Typical

You show these regressive baggers a working solution since 1983 and they disagree...then they wonder why they are going to keep losing elections for decades.....to many of you had your heads banged against the toilet bowl during your baths, has to be the reason and only explanation why logic fails you dearly....

Steve Bulger's picture

Mea culpa, Paul

I thought you were responding to the comment by Jerry. As a native Mainer and a current NH resident (can't tolerate my home state's tax policies and liberal philosophy), I'm all for anything Maine's tax-and-spend legislature passes to drive more business into NH - keeps my taxes lower. Good luck dealing with those fools in Augusta.

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