AUGUSTA — Fearful of not being able to file their taxes in time and of having to face filing inconsistencies, local business leaders were pressuring state lawmakers in Augusta on Friday, urging them to quickly pass tax conformity legislation.

With most businesses required to file taxes by March 15, politicians have been wrangling over changes to the state’s tax code aimed at making Maine law conform to recently enacted federal tax-code changes.

Using social media, emails and phone calls, area business owners were starting to press lawmakers on the matter and will continue to do so, Matt Leonard, president of the Lewiston Auburn Metropolitan Chamber of Commerce, said Friday.

The effort follows a call to action by Maine Republican Gov. Paul LePage, who addressed a chamber audience of about 300 people Thursday morning. LePage urged business people to contact their lawmakers.

Leonard said that for local business owners there are two major concerns: the need to get their taxes filed for 2015 and long-term stability within the state’s tax code.

“Tax-filing deadline is approaching,” Leonard said, and “businesses want more predictability than a one-year commitment.”

He was referring to a state income tax credit that’s available to profitable businesses that invest more than $2.5 million in capital improvements at their businesses in a tax year. The credit costs the state an estimated $11 million a year.

Democrats have agreed to keep the credit in place for the 2015 tax year, but worry about extending it indefinitely with the state facing other funding shortfalls, including a public education deficit approaching $23 million. They want to examine the program’s effectiveness before extending it beyond 2015.

LePage and his Republican allies want to make the tax credit permanent this year.

Lawmakers are largely in agreement on most of the other provisions in the tax conformity legislation, including making permanent tax credits and deductions for a range of things, from mortgage interest to student loan debt.

“All parties want to get this resolved quickly and we are 90 percent in agreement,” Sen. Nate Libby, D-Lewiston, said. Libby, who serves on the Legislature’s Taxation Committee, said Democrats were wrestling with reconciling an expected increase in education spending with a tax credit program for successful businesses.

Libby said that without a state increase for public school costs, it is likely local property taxpayers will have to foot the bill. He said Democrats are wary of cutting a tax on certain businesses if it results in a property tax increase for residents and other business owners.

Leonard, who can rattle off a list of local businesses that have made major capital improvements in 2015, said other businesses want to follow suit but are holding back without the assurance they too will be able to benefit from the tax credit in the future.

He said businesses are also concerned about the shortfall in education spending and with ever-increasing property taxes, but said lawmakers shouldn’t conflate the two issues.

“Lewiston-Auburn is a community on the rise, there’s a lot of uplift, if you will, of the buildings,” Leonard said, citing Agren Appliance and Mechanics Savings Bank, among others, that have recently made major capital improvements. “Other businesses want to do that.”

Leonard said that on the horizon were development projects for Bates Mill No. 5, the Miracle Enterprises medical tourism development in Auburn and the commercial retail development of Maine Turnpike Exit 80 in Lewiston.

“We are seeing a lot of investment from outside the state coming into Maine and now is not the time to put ourselves at a competitive disadvantage,” Leonard said. With Maine’s already high energy costs and tax rates, the state needs to keep in place the incentives it does have for business expansions, he said.

Legislative leaders met Thursday to discuss the tax bill. A version of the bill that doesn’t extend the business tax credit beyond 2015 was approved in the Democratically controlled House, but remains tabled in the Senate.

Senate President Mike Thibodeau, R-Winterport, said Friday that there were no plans for leadership to meet over the weekend on the matter.

“I don’t anticipate any meetings about tax conformity at the State House this weekend,” Thibodeau said. “We are still talking, trying to find a path forward. It is incredibly important to Maine’s economy that we are successful in this matter.”

Leonard said the lack of urgency on the matter was increasingly frustrating for Maine businesspeople.

“I really wish they would rethink that,” Leonard said. “I would hope they would get this done. The longer this goes on the more anxiety that’s going to be wrapped around it.”

On Friday, LePage again put pressure on legislative Democrats, charging them with holding the legislation “for ransom by tying it to education funding, which is totally unrelated.” He also said state education spending was up by $150 million since 2006, an 18 percent increase, while the student population was down by 25,000 students, a 13 percent decrease.

“There’s no reason to pay ransom for tax conformity,” LePage said in a prepared statement. “The Democrats are either for it or against it. If they think tax conformity is good for the Maine people — which it is — they should vote for it. If Democrats disagree with President Obama and think Maine taxpayers do not deserve the same tax refund the federal government is giving them, they should just vote against it.”

But Rep. Peggy Rotundo, D-Lewiston, the House chairwoman of the Legislature’s budget-writing Appropriations Committee, said LePage was “playing fast and loose with the numbers.” 

Rotundo said the one section of the bill that’s become a sticking point is the Maine-only tax-credit provision for profitable businesses that invest more than $2.5 million in capital improvements in a year.

She said lawmakers are in agreement on other conformity issues, including permanent tax cuts for smaller businesses that make investments below the $2.5-million threshold.

It’s a point, Rotundo said, that LePage has failed to acknowledge. She said Friday that lawmakers on both sides understand the urgency to get the issue settled so businesses and individuals can file their income taxes for 2015.

In the bill awaiting action in the Senate is the additional $23 million for public school funding, Rotundo said, which is a means of stabilizing local property taxes for residents and businesses alike.

“The business community in our plan benefits from conformity. They also benefit from property tax relief,” Rotundo said. The sticking point on the bill, she said, “mostly benefits large, out-of-state corporations … and something that most people are not using anyway.”

sthistle@sunjournal.com

Copy the Story Link