AUGUSTA – Legislative Republicans put forth a tax and spending plan Thursday that calls for constitutional limits on growth in state government and across-the-board cuts in Maine’s income tax rates.

Leaders of the minority party laid out those and other proposals days after a top Democrat and other groups outlined their proposals on an issue that gains urgency in the State House with a pair of pending tax-cut propositions.

“We have plenty of obligations on the books now … and yet the expansion continues,” said Sen. Richard Nass, R-Acton. “We think it’s time to stop – no more.”

Republicans said no existing state programs need to be curtailed if all new and expanded services are ruled out. They left the door open to negotiations, but vowed to remain steadfast on spending limits.

“The spending cap is the umbrella we’d like to work under,” said Nass, a member of the Taxation Committee.

GOP leaders propose constitutional amendments limiting growth in state government to the inflation rate plus population growth, and requiring two-thirds legislative votes of approval in order to raise any fees or taxes.

Republicans said 14 other states have already made it harder to raise taxes by requiring “super majority” votes to do so.

Any revenues that exceed the revenue cap would be used to eliminate income taxes for families earning less than $28,000 a year and across-the-board reductions in income tax rates.

In addition, Republicans want future legislative budgets to fully fund existing obligations before any programs are added or expanded.

To rein in property taxes, the GOP wants tax bills to be based on the purchase price, with increases pegged to inflation. When a property is sold, taxes would be based on fair market value at the time of the transfer.

Democratic House and Senate leaders said they were pleased to see the Republicans step forward with a package – especially one that addresses tax reform.

On the spending side, House Majority Leader John Richardson said programs have already been cut while Democrats were in power.

The Brunswick Democrat pointed to reductions resulting from last year’s $1.3 billion budget shortfall. The budget was balanced with no new taxes, Democrats said.

Senate Majority Whip Ken Gagnon, D-Waterville, said the Republicans’ proposal would make Maine’s income tax more regressive by lowering taxes on the highest earners, which would penalize working families.

The GOP proposals were presented two days after Democratic House Speaker Patrick Colwell of Gardiner presented his bill to combine Maine’s Homestead and Circuit Breaker tax relief programs. Colwell’s bill calls for refund checks to be sent directly to taxpayers.

On Wednesday, a coalition of senior citizens’ groups and tax reform activists proposed a “Homestead Plus” package that would limit property taxes to 5 percent of family income, provide $75 million in direct relief and send refunds directly to taxpayers.

The package would be funded by either a penny increase in Maine’s 5 percent sales tax or by expanding the sales tax base.

Meanwhile on Thursday, a working group of legislators from both parties, public school and municipal government leaders began deliberations aimed at finding a compromise tax relief package.

The matter is a high priority with a pair of initiated referendums – which Gov. John Baldacci and many lawmakers believe are too far-reaching – pending in the months ahead.

A proposal backed by the Maine Municipal Association, which sought to make the state pay 55 percent of funding for public education, failed to get majority support at the polls in November, so it’s scheduled to reappear on the ballot in June.

A separate proposal by the Maine Tax Action Network would cap property taxes at $10 per $1,000 of assessed value, based on values in 1996-97. Baldacci has decried the initiative as a “meat ax” approach.

AP-ES-02-12-04 1631EST



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