The package competes with an item on the fall ballot.

AUGUSTA (AP) – As debate opened in Thursday’s special legislative session, the House of Representatives gave preliminary approval to a tax relief proposal designed to counter a referendum initiative backed by the Maine Municipal Association.

The plan backed by the MMA would boost state aid to local school systems, as would the competing measure advanced by Gov. John Baldacci.

But the Baldacci plan would phase in an increase over five years, and the gradual nature of that approach has been judged to be too slow by some critics.

The special legislative session will decide whether November voters face one tax relief question or two – the MMA-backed plan and a competing measure produced by state lawmakers.

In voting to support the governor’s proposal Thursday, House members overwhelmingly endorsed an amendment that would expand a property tax subsidy provided through the so-called circuit-breaker program. The amendment, put forth by Republican Rep. Peter Mills of Cornville, would remove income eligibility standards in the current tax rebate program, known formally as the Maine Residents Property Tax Program.

Rebates would be equal to the amount by which a homeowner’s or renter’s property taxes on the first $200,000 of value on a dwelling exceeds 5 percent of household income.

The first-year cost of such a program expansion was pegged at more than $34 million for fiscal 2004-2005.

“It puts the challenge to the Legislature to find the money,” Mills said after the House vote approving his amendment. “It isn’t going to be easy.”

The Democratic House chairman of the Taxation Committee, Rep. David Lemoine of Old Orchard Beach, cautioned his colleagues against saddling a new tax relief plan with unsustainable costs and suggested it was too early to tell what would finally emerge from the Legislature. “We’re in the first inning of the game,” he said.

Baldacci’s latest tax relief plan won a 10-3 endorsement from the Taxation Committee last week.


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