Maine Senate, House pass budget fix

Troy R. Bennett | BDN

Rep. Joe Brooks, D-Winterport sits at his desk in House of Representatives Tuesday. "I want jobs and I am business-friendly and want to do everything we can to put people back to work but I want it done in an organized structured way where we can plan all the bonds and not just pick the ones we think are nice," Brooks said Tuesday night during a debate over whether the Legislature should have moved to put a $100 million transportation borrowing package before voters.

AUGUSTA — The Legislature has passed a bill to fix a $6 million hole in Maine's two-year $6.3 billion state budget.

Troy R. Bennett/Bangor Daily News

State Rep. Elizabeth Dickerson, D-Rockland, reacts as LD 1572 fails to pass in the House Tuesday. The bill would have made changes to the budget.

The Democratic-led House and Senate gave final approval to a bill to raise the service provider tax late Tuesday night.

Its fate was uncertain after it failed in the House earlier Tuesday. But lawmakers removed the requirement that the bill take effect immediately, allowing it to pass with a simple majority instead of a two-thirds vote.

It's fate is still not certain. If Gov. Paul LePage vetoes it, there could still be a $6 million hole.

The Legislature has adjourned for the summer, so if the governor vetoes it, further work on the budget would have to wait until the Legislature reconvenes.

Republicans have serious concerns about it.

In drafting the budget, lawmakers left out the service provider tax, for things like health care providers and television cable services.

Maine's Office of Fiscal and Program Review says it would have resulted in a discrepancy in the budget of about $2.5 million this fiscal year and nearly $4 million next fiscal year.

The bill clarified that a sales tax increase from 5 percent to 5.5 percent would be applied to all categories for which the state currently collects sales tax, including a certain group of taxable health care services. It is estimated the tax increase would raise about $6 million over the state's two-year budget cycle.

Earlier, the bill fell short. Only 92 members of the House voted for the bill while 50 voted against it. 

The Democratic-led Senate later voted 24-9 in favor of the bill, reaching the two-thirds majority necessary for the bill to go into effect immediately.

Lawmakers enacted the budget, which went into effect July 1, over a  LePage veto of the measure based on his concern with the sales tax increase.

House Majority Leader Seth Berry, D-Bowdoinham, said the failure to pass the bill as an emergency wasn't a devastating development, but it is troublesome.

"The sky is not going to fall," Berry said. "But it is not a good thing because they are doubling back on prior commitments in terms of the budget negotiations."

Meanwhile, there was speculation Tuesday that some Republicans were withholding votes because they were angered that a $100 million package of bonds aimed at transportation infrastructure improvements was being held over by Democrats.

House Minority Leader Ken Fredette, R-Newport, issued a statement on the bond package early Tuesday saying Republicans wanted Democrats to move the bonds along to voters this fall, and not as part of a larger package of bonding proposals.

"Democrats are proving once again that they are willing to jeopardize the passage of a jobs initiative that enjoys broad bipartisan support just so that they can get their way on contentious spending initiatives," Fredette said.

Fredette said he had "no knowledge" of Republicans withholding votes over the transportation bonds. The transportation bond package as proposed by Gov. Paul LePage was "revolutionary," according to Fredette, who suggested Democrats were holding the bonding proposal to deny LePage any credit for the measure.

"The political games have to stop," Fredette said. "The job creation must continue. It's time for Democrats and Republicans to come together and pass a good bill when they see it."

But Berry said the question over how LePage would issue more than $286 million of previously authorized bonds made it unclear how transportation bonds should be spent in the future, and Democrats wanted to consider that information and return in the fall to pass a bonding package onto voters statewide for authorization.

Berry said he had heard rumors Republicans would withhold votes on other key bills if the transportation bonds were not acted on during the current lawmaking session, but said he had no direct evidence of that.

"If Republicans want to defy their own prior agreements and defy the Constitution there's not a lot we can do," Berry said. The state's Constitution requires a balanced budget.

He said Fredette's claim Democrats were playing political games was "absurd."

"It's mind-boggling that they could suggest that responsible budgeting and responsible investments through bonding is some kind of political game," Berry said. "The only political game is being played by Republicans here."

Late Tuesday the House rejected a move by Republicans to move forward on the transportation bonds as Democrats argued the bonds would be part a package bonding bills they planned to work sometime later this summer.

Democrats said there was no plan to cover the debt service on the bonds in the current budget, but Republicans said that could be handled with a supplemental budget if and when voters approved the bonds.

"I want jobs and I am business-friendly and want to do everything we can to put people back to work but I want it done in an organized structured way where we can plan all the bonds and not just pick the ones we think are nice," said Rep. Joe Brooks, D-Winterport said. 

Fredette said the matching federal funds for the transportation bonds would bring a total of $250 million of highway, bridge and port improvements to Maine.

"Maine needs jobs now," Fredette said. "There is no reason why we cannot enact it today, pushing it down the road only jeopardizes its chance for passage."

Democrats said the move was a political stunt in the closing hours of the Legislative session and even if they voted to move the transportation bonds forward, the department had no intention of selling those bonds until 2014.

“Suddenly, on the last day of Legislative work, Republicans are joining Democrats in our effort to push for important job-creating bonds, but they did nothing as the governor sat on many voter-approved bonds for years,” Assistant House Majority Leader Jeff McCabe, D-Skowhegan said in a prepared statement. “Democrats are ready to work with Republicans on a thoughtful and comprehensive plan for bonding, but we won’t play a part in their political games.”

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Sounds fair to me...

If LePage will not move forward with the bonds that have already been approved by the voters, why should the legislature move forward with a bond he's requesting? If the Governor is so concerned about "creating jobs" (and other moves he's made cast that claim in doubt), then he needs to release the bonds that have already been approved. Several of those also involved the creation of jobs.

Funny thing is, the Republicans are usually quick to claim that the jobs created by bonds are only temporary construction jobs that will expire when the bonds do, so how can Fredette, with a straight face, complain that the Dems are blocking job creation?

JOHN PAINTER's picture

By voting to increase the

By voting to increase the "Service Provider Tax" in Maine, we continue to play a dangerous game of chicken with the Federal Government, Centers for Medicare and Medicaid.

Maine's Service Provider Tax, is a tax and match scheme the Federal Goverment has warned and prosecuted states about for nearly a decade, highlighted by the Deficit Reduction Act of 2005. The reason the Federal Government looks at such schemes like Maine runs is because Federal Medicaid dollars meant to pay for beneficiary services are used pay state "service taxes" which typically end up going for the states general fund needs. A violation of Federal law.

Service Provider Taxes/Tax and Match schemes work like this.

The tax is levied upon the cost of a MaineCare (Medicaid) service which was set by Maine DHHS (bureaucrats in Augusta), the service provider is informed what they will charge for a service which is a fixed fee statewide (case management costs the same in Saco as it does in Fort Kent and has been for a number of years), the state then taxes the service. That tax shows up as an additional cost for the service provider (while the service provider is not inflating the cost of their service, and gets nothing out of it, the state is), inflating what it costs to deliver a service. The state is then able to show that as an additional cost in MaineCare (Medicaid) spending, which qualifies for more Federal Medicaid match. Tax and Match.


A new low

So now our Republican legislators have reversed themselves for a third time. They voted for the budget and they uncharacteristically voted to override the veto but now they reverse their vote to try to block the budget. So when the governor vetoes this budget again, how will they vote this time ? I think this could occasion betting. Never have I seen such convoluted thinking in people who are supposed to know what they are doing. The governor really has these guys chasing their own tails. He must really be savoring this unprecedented power in Maine politics. We usually know better. Sad to say this game playing is having a really bad effect on our economy.

ERNEST LABBE's picture

Dear members of the house and senate

Dear members of the house and senate. It is time you all stopped playing the blame game and starting acting like grown ups not first graders. We own the ball so neither of you can take it home with you. The time is soon coming when each and every one of you should be flipping burgers at McDonalds, not playing games to make yourselves look good to the voters. You are failing miserably at that deception.



But, you need to add the bully in the Blaine House to the mix.

Political games by Democrats,

Political games by Democrats, no way! LOL


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