The governor wants lawmakers to pass a measure to compete with Carol Palesky’s.

AUGUSTA – With one day to go and no property tax relief in sight, Gov. John Baldacci Wednesday remained optimistic lawmakers would agree on something to beat Carol Palesky’s upcoming tax cap referendum. In fact, Baldacci’s bright outlook extended to the whole session, which he called the best “in 40 years.”

As of Wednesday afternoon:

• House Republicans were still calling for a constitutional amendment to cap state, local and county government spending to the growth of income, but would consider a plan by Baldacci and House Democrats to raise alcohol and cigarette taxes to provide additional property tax relief.

• Baldacci and House Democrats were warming to the GOP call for the constitutional amendment.

• Senate Democrats continued to push for raising the sales tax by 1 cent to provide $115 million each year in property tax relief – a proposal Baldacci has promised to reject.

“I don’t think we’re very close,” said House Minority Leader Joe Bruno, R-Raymond. However, he said he found promising the governor’s and Democrats’ willingness to consider a governmental spending cap tied to income growth.

“Right now that’s about 4.5 percent. That’s pretty generous,” Bruno said. House Republicans “will look at” raising alcohol and cigarette taxes, he said.

The House and the governor are not yet in full agreement, but “we’re talking,” Bruno noted.

The holdout was Senate Democrats, who favored raising the sales tax 1 cent. They sent a letter to Baldacci rejecting the constitutional spending cap idea.

Polls show a majority of Mainers support raising the sales tax for property tax relief, said Senate Majority Leader Sharon Treat, D-Farmingdale. Given other choices, “we still feel our plan offers the most comprehensive and fiscally responsible solution,” Treat said.

Bruno said that for something to happen on property tax relief, the governor will have to convince Senate Democrats to go along with the constitutional spending cap. “If they don’t, tax reform is dead for this session.”

Baldacci didn’t seem concerned Wednesday.

“They (Senate Democrats) need to go through this process legislatively.” After their proposal is rejected, people will have to say: “What are we going to do now?'” Baldacci said. At that point “we’re going to get a bi-partisan agreement.”

Baldacci said he decided to support the constitutional amendment to cap spending “to build a bridge” for agreement.

A higher sales tax would be too much of a burden on working families, Baldacci said. “It goes in the wrong direction.”

What the public wants is property tax relief and spending caps, he said. If Democrats and Republicans make that happen, and if the business community, municipalities and educators “all stand together … we can defeat the Palesky proposal,” Baldacci said.

The Palesky proposal would essentially cap all property taxes at 1 percent of a property’s assessed value – far below the current rates.

Baldacci also praised lawmakers for doing much this session “that isn’t getting reported.” Laws passed to help stabilize the dairy industry, merge the departments of Human Services and Behavioral and Developmental Services, build a new community college system, reform health care and straighten out workers compensation have resulted in “one of the most productive legislatures in the last 40 years,” Baldacci said.

Republican Bruno seemed shocked by Baldacci’s assessment.

“What? No! Get out of here!” he exclaimed. “This is the worst session I’ve ever had in 10 years up here. There’s been no discussion, a thorough lack of leadership with everybody doing their own thing. We’re about to pass two budgets that are majority budgets” and lack Republican votes because they didn’t correct high spending. “It’s been a terrible session.”

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