House Democrats have blinked in a standoff over education funding, offering an deal to increase the threshold for Maine’s surtax on high earners and lower it from 3 percent to 1.75 percent.

Republicans are on the record as wanting the surtax gone. Progressives still want to keep it and Senate Democrats didn’t join their House counterparts in unveiling the plan. Even though negotiations are moving toward the middle, there are still fractures on education funding.

It’s the issue largely holding up Maine’s next two-year budget. Discussions are happening behind closed doors between party leaders and members of the Legislature’s Appropriations Committee, which voted out a divided budget last week.

This is a debate over whether Maine will fund 55 percent of local school costs, a threshold set by voters in 2004 that has never been reached. Wrapped up in it is whether legislators will keep, scrap or change the 3 percent surtax on annual incomeabove $200,000 passed by voters last year to fund schools. As it is, the tax is expected to generate more than $300 million over two years.

Republicans hate it, saying it’ll make Maine less competitive and that they’re holding out for a budget that eliminates it. But Democrats kept it in a budget plan they proposed in April to rival Gov. Paul LePage’s original plan in January.

It was pushed by the Maine Education Association and the Maine People’s Alliance, which are loud Democratic constituencies who have been calling on the Legislature to uphold voters’ will. But the reality is that the parties must meet in the middle.

House Democrats led by Speaker Sara Gideon of Freeport tried that this week, offering a deal to fund education at 55 percent by the 2019 fiscal year while increasing the surtax’s threshold to $300,000 and lowering it to 1.75 percent, which is estimated to generate $128 million over two years.

To offset the difference, House Democrats’ plan would find another $114 million by raising the sales tax from 5.5 percent to 5.75 percent, the lodging tax from 9 percent to 10 percent and raising taxes on tobacco products to the same rate as cigarettes, which is called equalization.

“I hope our Republican colleagues join us at the table and finally get serious about finalizing this budget,” Gideon said in a statement.

Democrats have mostly moved in unison on the budget to date. However, Senate Democrats haven’t been touting Gideon’s plan on education funding, reflecting difference that’s likely more about negotiating tactics and less about policy.

In a statement, Senate Minority Leader Troy Jackson, D-Allagash, said Gideon has “made yet another offer in an effort to get Republicans to negotiate seriously” and called it “more generous than many people would have liked.”

“But it shows how serious we are about doing our jobs and passing a budget to avoid the kind of crisis that Republicans seem determined to create,” he said. “The ball is in their court.”

Republicans were tight-lipped on House Democrats’ offer, with Jim Cyr, a spokesman for Senate President Mike Thibodeau, R-Winterport, saying only that “negotiations are ongoing.” A spokesman for House Minority Leader Ken Fredette, R-Newport, declined comment.

Any budget needs to win two-thirds support in both chambers, and the clock is ticking to get it passed and to LePage before the Legislature is set to adjourn on June 21, leaving time to override a likely veto.

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