AUGUSTA – A Democratic schism featuring disagreement over how to raise money for property tax relief spawned a new round of plans Thursday.

Senate Democrats lined up in favor of a 1-cent hike in the sales tax to raise $120 million annually, according to Senate Majority Leader Sharon Treat, D-Farmingdale.

House Democrats were hoping to build support for increasing “sin taxes” for property tax relief.

Republicans weren’t supporting either plan. And Gov. John Baldacci said he’d “look at” raising sin taxes, but staunchly opposes raising the sales tax.

The House Democratic plan unveiled Thursday would:

• Raise the cigarette tax from $1 to $1.50 per pack, generating $35.5 million.

• Raise the tax on alcoholic drinks (not beer) sold in bars from 7 to 10 percent, raising $4.5 million.

• Increase car rental tax from 10 to 20 percent, raising $4 million.

• Hike wine tax 30 cents per gallon, raising $2 million.

The House could act on its plan Friday, April 16, and Senate leaders said they hoped for prompt action soon. Both chambers expected to take a break at the end of the week before reconvening late in the month.

During a House caucus Thursday, the Democratic plan drew support and criticism. With the Carol Palesky tax cap referendum on the horizon, lawmakers must act, said House Majority John Richardson, D-Brunswick. “The gun is to municipals’ head and about to go off if we don’t act. … We are facing a tax revolt in Maine.”

Some Democrats said they wanted the beer tax hiked, and that the plan didn’t offer enough relief to property taxpayers.

“When I look at this I say, Carol Palesky wins,'” said Rep. Joanne Twomey, D-Biddeford. Citing a poll showing support for increasing the sales tax 1 cent, Twomey said she was unhappy about raising “sin taxes on the little guy” and complained that Democrats are afraid “to tax the rich.”

Rep. Tom Watson, D-Bath, agreed. “We’re wimping out.” Rep. Elaine Makas, D-Lewiston, disliked raising cigarette taxes and said the sales tax should be raised 1 cent. “We’ve demonized people who smoke quite enough,” Makas said.

But other House Democrats said the plan has promise and can gain enough support to pass. “We looked at what’s doable,” said Rep. David Lemoine, D-Old Orchard Beach. Rep. Nancy Smith, D-Monmouth, said she supports the plan. “It’s something real to take home to people.”

Even if the Democratic plan were to pass the House, because it is different from the Senate Democrats’ plan, the two groups have more work to do agreeing on one plan.

House Minority Leader Joe Bruno, R-Raymond, said Thursday that lawmakers will pass a tax plan before it adjourns, “but it won’t have any Republican support.” Democrats are only offering plans that raise taxes, he said. “There’s no way we’d support this.”

Republicans are insisting on a spending cap passed in the Constitution. It’s the only way lawmakers will slow spending, Bruno said, adding that state revenue increased 8.4 percent last year, and the problem isn’t a lack of money, it’s too much spending.

Maine voters are awaiting two ballot questions on the matter.

The Maine Municipal Association and the Maine Education Association have promoted one initiative that would require the state to raise its share of local school funding to 55 percent immediately, at a cost pegged at around $250 million.

Also headed for statewide ballots is another proposal, championed by anti-tax activist Palesky, that would cap property taxes at $10 per $1,000 of assessed value, based on values in 1996-97.
Staff and The Associated Press contributed to this story.