AUGUSTA — After working through the weekend, lawmakers on the Legislature’s budget-writing Appropriations and Financial Affairs Committee voiced optimism Monday that they were close to a final deal on the state’s next two-year budget.

Negotiators from the Republican minority and Democratic majority reached agreement on several key points in Democratic Gov. Janet Mills’ spending package, which totals about $8 billion. But they were still in disagreement over funding increases for the University of Maine System, the Maine Community College System and Maine Maritime Academy.

Over the weekend, the committee unanimously approved an increase in the amount of tax revenue the state will share with its cities and towns, and came to terms over a Mills proposal to increase the basic salary for starting public school teachers to $40,000 a year.

They also agreed to again increase the state’s homestead exemption – the second bump in as many budget cycles – bringing it from $20,000 to $25,000. The change would allow homeowners to deduct the first $25,000 of the valuation on their primary residence from their property tax bills, while the state reimburses cities and towns for the loss in revenue at 70 percent.

In addition, lawmakers agreed to expand by 13,000 households eligibility for a property tax fairness credit that is paid largely to low-income elderly residents who spend a disproportionate amount of their income on housing, either rent or a mortgage payments, according to Rep. Drew Gattine, D-Westbrook, the House chairman of the committee.

“This has a really important impact on seniors, on older Mainers,” Gattine said.

The changes combined will cost the state about $75 million over the next two-year budget cycle but are squarely aimed at providing additional relief to people paying property taxes and represent more than what Mills had initially proposed.

Gattine said he was pleased with the agreements lawmakers from both sides of the aisle were able to reach during late-night negotiations over the weekend. Mills was also on hand for much of the weekend, meeting with committee members and others as they worked out details or negotiated compromises.

Still, Republicans remained steadfast in their pledge to whittle down the total spending package to something less than $8 billion – which would be an 11 percent increase over the current $7.1 billion budget that runs out on June 30.

John Bott, a spokesman for House Republicans, said Republicans would not accept a total spending package beyond $8 billion. “It’s not going to be $8 billion,” he said.

Democrats need Republican votes in order to get the two-thirds support the budget bill will need to become law as an emergency measure. The emergency designation is needed to put the budget in place by June 30, when the current budget runs out.

Without that, lawmakers could face another state government shutdown. The last happened in 2017 when Republicans withheld their votes over a 3 percent income tax surcharge for education that was approved by voters but eventually overturned by the Legislature. That deal included an additional $162 million for public schools that has been maintained in the current budget.

Under the revenue sharing plan agreed to in the next budget, the state would share 3 percent of the income and sales tax it collects with cities and towns in the first year of the budget. The rate would increase to 3.75 percent in the second year.

The state now shares 2 percent of its revenues with municipalities. Mills’ budget had proposed going to 2.5 percent in the first year and 3 percent in the second year.

The next two-year budget also includes state funding to increase the starting minimum salary for all public school teachers in Maine to $40,000. That wage increase, under the proposal negotiated by the committee, will be phased in over three years, going to $35,000 next year, $37,500 the year after that and $40,000 in the third year of the plan.

Mills also has proposed increasing funding for all three of the state’s higher education institutions by 3 percent in each of the next two years. But Republicans seemed reluctant to go along with that figure even though they have acknowledged that the higher education system is important to the state’s ongoing shortage of skilled workers.

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