AUGUSTA, Maine (AP) — A state budget that encompasses key policy changes proposed by Gov. Paul LePage, including pension rollbacks and tax breaks, was on the verge of final approval after the Senate joined the House in delivering overwhelming votes in favor of the $6.1 billion package.
"It seemed like this day would never come," said Sen. Dawn Hill, D-Cape Neddick, before the Senate's 29-6 vote to pass the bill. The Senate vote and House tally of 120-26 earlier in the day were buoyed by a unanimous, bipartisan recommendation by the Appropriations Committee to pass the bill.
"We were able to craft a unanimous budget in the most difficult of times," said Sen. Richard Rosen, R-Bucksport, the Senate chair of Appropriations. A final Senate enactment vote needed to send the bill to the governor is expected Thursday.
The austerity budget proposed by the Republican governor includes provisions to address sluggish revenues and pay down an unfunded liability in the pension system that's estimated at more than $4 billion and is required to be paid off by 2018. While lawmakers who framed the final package say the cuts are shared by all, critics maintained that public workers are bearing an unfair burden.
The budget includes a one-year freeze on increases in state worker pensions and limits annual cost-of-living increases in the state retirement system to 3 percent.
It also calls for $150 million in tax cuts, lower than the $203 million initially sought by LePage. The state's graduated income tax rates would change from the present 2 percent rate to zero, and the 4.5 percent and 7 percent rates to 6.5 percent. The top rate would drop from 8 percent to 7.95 percent.
Maine income taxes would also conform to the federal personal exemption and standard deduction, and the estate tax exclusion would rise from $1 million to $2 million.
Tax cuts for businesses are also included in the budget, which conforms to federal deductions for equipment, has a capital investment credit, a sales tax refund on fuel used in commercial fishing among other provisions. The budget restores prescription drug coverage for the elderly which had been targeted for cuts.
Among the most contentious provisions is one that raises the cap on pension income eligible for cost of living increases from $20,000 to $25,000, a change fiercely opposed by retirees — especially former teachers — who say it would cut deeply into their pensions.
Rep. W. Bruce MacDonald, D-Boothbay, said teachers' average pensions are now close to federal poverty level for a family of two.
A retired teacher, Rep. Edward Mazurek, agreed.
"If we want to have young people go into the field of education in Maine, we have to do something to make it attractive to them," said Mazurek, D-Rockland.
Rep. Seth Berry of Bowdoinham, the assistant House Democratic leader, failed in an attempt to revamp some of the tax changes in the budget, saying they unfairly benefit high-income earners, hurt those earning lower incomes, and shift the tax burden to property taxpayers.
But Appropriations Committee members defended the budget, saying it spreads the pain fairly.
Rep. Kathleen Chase, R-Wells, said that by passing the budget lawmakers are "removing one of the biggest shadows we have hanging" over state finances: the unfunded liability.
An amendment that sought to shift funds to pay for increased security operations at the State House to Maine's court houses was defeated.
Copyright 2011 The Associated Press.