“We’ve heard loud and clear from the credit agencies that this bill puts Maine’s credit rating at risk,” said Rep. Seth Berry, who has opposed the TABOR like measure that threatens funding for schools and towns across the state. “This is nothing short of an unfair and unfunded tax shift onto middle class families who are already paying enough in property taxes.”

The bill and the nearly $500 million in unfunded tax cuts for the wealthy passed by the GOP in the past eighteen months has caused concern among the credit rating agencies. A down grade of Maine’s AA+ credit rating could result in higher interest rates and loss of investor confidence.

Analysis by Maine Revenue Services shows the Republican bill, would give an average tax reduction of only $1 to the bottom 20 percent of income earners. By comparison, the tax cut would give an average reduction of over $21,000 to the wealthiest 1 percent of Maine residents.

The original proposal used 20 percent of one-time surpluses that would typically be put in the state’s reserve funds to make permanent cuts, without paying for them in future years. The surplus only pays for the cuts in the first year.

In February, Fitch Ratings Inc., one of the most influential credit rating agencies, changed its outlook for Maine’s creditworthiness from “stable” to “negative,” putting the state on notice that our high AA+ rating is in danger of being downgraded. Fitch warned that their rating “is dependent upon the state’s ability to … meaningfully rebuild reserves depleted during the recession.”

Moody’s Investor Services and Standard & Poor’s, the other two major credit rating agencies, have also served notice in the past eight months that Maine’s rating is in jeopardy because of tax changes that widen revenue gaps and deplete reserves.

In an effort to make it more palatable to the credit agencies, Republican lawmakers on the Appropriations committee introduced an amendment that would put more money in the state’s rainy day fund before allowing the ratchet down to go into effect.

Democrats and leading Republicans in the LePage Administration shared concerns that the bill uses one-time money to pay for ongoing cuts , and could impact the state’s bond rating.
Democrats have said this is as irresponsible as taking on a car payment after winning a $100 on a scratch ticket.

According to the nonpartisan fiscal office of the Maine Legislature, full implementation of LD 849 as written would cause losses to Maine schools, roads, bridges, and towns totaling over $1.2 billion per biennium.

“This risky, costly, and radical proposal would have undermined the laws that protect Maine’s environment and communities,” said NRCM Advocacy Director Pete Didisheim. “Despite a massive effort by lobbyists to force this dangerous bill through the legislature, a bipartisan majority held firm and refused to support it. Common sense won the day over ideology.”

The original bill would have allowed property owners to receive payments from the State Treasury to compensate them for claimed losses in property values resulting from future land use regulations. Property owners would be allowed to ignore Maine law if the
State did not make the compensation payments.

Such proposals have been broadly defeated nationwide based on concerns about their high costs and negative consequences, and previous takings bills have been rejected by the Maine Legislature at least five times since 1995.

In March, a majority of the Judiciary Committee rejected LD 1810, and proposed a complete substitute that would avoid the litigation, costs, and harm to the environment that would have resulted from the bill. But supporters of the original bill worked relentlessly to keep their proposal alive. These efforts peaked during the week of April 9, when the Majority Report from the Judiciary Committee was blocked in the House, and the Minority Report was voted on instead, passing by a one-vote margin. (See http://www.downeast.com/georges-outdoor-news/2012/april/knight-beating-takings)

Lobbyists then attempted for several days to force the bill forward in the Senate, but they faced a bipartisan block of 20 Senators—including Republican Senators Tom Saviello, Roger Katz, Chris Rector, and Earl McCormick—who were firmly opposed to the Minority Report. The Senate adjourned at 2:30 a.m. on April 14 without taking a vote on LD 1810, leaving it to be considered when they reconvened May 15. When the bill finally was scheduled for consideration in the Senate, it was clear that supporters of the Minority Report had failed to recruit any additional support, so they offered a motion to “indefinitely postpone” the bill—and the House followed suit.

“We greatly appreciate the strong leadership provided by both Republicans and Democrats who saw the takings bill for what it was—a thinly veiled attempt to prevent the Legislature from passing laws in the future that will be needed to protect our communities, wildlife habitat, and the character of Maine,” said Maine Audubon’s Staff Attorney Jenn Burns Gray.

The Majority Report proposal from the Judiciary Committee was drafted by Rep. Brad Moulton (R-York) and Rep. Charles Priest (D-Brunswick), with input from Sen. Tom Saviello (R-Franklin), Rep. Bob Duchesne (D-Hudson) and other lawmakers. This proposal would have created a Regulatory Fairness Committee to evaluate the impact of regulations on property owners and initiate legislative solutions. The motions to indefinitely postpone the bill had the result of blocking adoption of the Majority Report.

“The takings bill finally hit the brick wall of reality,” said Sean Mahoney, Maine Director of the Conservation Law Foundation. “The Minority Report was so complex, convoluted, costly, and extreme that it would have been a disaster if passed into law. We’re very pleased that a majority of Maine legislators understood this and voted to kill the bill.”

Maine taxpayers would have had to pay millions of dollars over time to fund implementation of the Minority Report. The fiscal note over the first three years alone was pegged at $1.28 million, and this estimate did not include any of the funds that would be needed to pay possible compensation payments of up to $400,000 per case.

In the very few states in the U.S. that have adopted legislation anything like the Minority Report, studies have revealed that corporate interests, large-scale developers, and attorneys have been the primary beneficiaries. Former State Senator Peter Mills made this point to legislators this year, saying “The primary impact—and its intended impact—is to stymie regulation for the benefit of large landowners with ample resources to paralyze state agencies. That is, in fact, how takings laws have been used in the few states that have enacted them. It’s not a statute for the little guy.”

“The Minority Report would have created multiple paths for developers to receive waivers from Maine law, allowing them to build developments that otherwise would be illegal,” said Didisheim. “Such waivers would have caused an unraveling of the laws that protect Maine’s environment and triggered lawsuits by people who suddenly learned that a massive development, waste dump, or energy project was landing next door to them because the developer had received a waiver from the law.”

“The Minority Report posed a major threat to Maine’s environmental safeguards,” said Maine Conservation Voters Executive Director Maureen Drouin. “That’s why defeating the bill was a top priority for people and organizations throughout Maine who love our clean air, clean water, and healthy communities.” The Maine Clammers Association, Congress of Lakes Association, Maine Municipal Association, and all of Maine’s major conservation and environmental organizations opposed the Minority Report for LD 1810.

Passage of takings bills like LD 1810 has been a high priority for the ultra-right-wing American Legislative Exchange Council (ALEC), which has promoted model legislation to state legislatures since the early 1990s.

Four bond proposals that would make needed investments in Maine’s colleges and universities, research and development, land conservation, and waste water and drinking water treatment gained initial support in the Maine House late this afternoon. Additional votes on these proposals and other public investments in improving roads and bridges are expected tonight.

Democrats urged strong support for the total $95.6 million in bond proposals before the House and Senate.

“A jobs bond will give our economy a much needed shot in the arm,” said Rep. Emily Cain, the House Democratic leader. “The best way to improve our economy is by making more investments that will help small businesses, job training and public education.”

Maine has lost more than 1,000 jobs since 2011 and was recently rated 50th for personal income growth according to the U.S. Bureau of Economic Analysis.

Earlier today, Republican lawmakers rejected two Democratic bond proposals that would have made investments in revitalizing Maine’s downtown communities and increased energy efficiency.

According to the non-partisan fiscal experts from the Legislature’s Office of Fiscal and Program Review, the state has the capacity to make public investment in a bond package for voters to approve. Debt service payments from 2013 to 2015 will decline by nearly $30 million, lowering the state’s payments on debt and increasing the capacity to borrow.

“It’s clear we can afford to invest in a jobs bond,” said Rep. Peggy Rotundo the lead House Democrat on the Appropriations committee. “If we don’t make these public investments now, we will be missing an opportunity to create jobs. Public investment will create jobs now and grow good-paying jobs for our future.”

The Association of General Contractors said the state lost 500 construction jobs from February to March this year alone, according to Department of Labor statistics.

Democrats support a comprehensive jobs bond, including public investment in roads, bridges and rail; research and development; educational infrastructure; water and wastewater treatment; and land conservation.

Maine has a track record of conservative bonding and has historically paid down its debt quickly. The state typically bonds for 10 years, not 20 or 30 as other states do. Debt service is typically between 4-7 percent of the General Fund.

Bonds require two-thirds support of the members present and voting to pass.

The Democratic lawmakers proposal includes a cost-saving MaineCare restructuring initiative that will deliver more efficient health care services; a cost-saving provider-fraud recovery program, and also increases funding for the state’s rainy day fund.

The Democratic legislators solution transfers $60 million in increased revenue re-projections from 2012 and 2013 budgets to help close the gap. They also provide approximately $28 million in savings initiatives, including a provider fraud recovery savings of $5 million, salary savings of $1 million, a MaineCare restructuring task force that projects a savings of $10 million, approximately $8 million in revenue transfers from other accounts, the restructuring of Health and Human Services, and other additional items.

The Democratic lawmakers propose to transfer $5 million into the state’s rainy day fund or the budget stabilization account and pay for the operating costs of the Dolby Landfill. That measure would leave about a $651,485 surplus balance.

Members of the Democratic caucus believe that the GOP proposal unnecessarily removes access to health care and services for thousands of children and seniors, while adding to the state’s unfunded tax cuts. Last year, a tax cut was passed that left a $400 million gap. In addition, the new cuts will cost $34 million in the next biennial budget.

The LePage administration proposal also relies on risky waivers from the federal government, which we’ve already been told won’t be allowed. It books millions of dollars in savings on waivers that the federal government already said would be rejected because they violate federal law.

“This 20 million dollars in research and development couldn’t come at more crucial time. Maine is behind when it comes to the number of graduate students in science and engineering. We rank 50th in the nation,” said Portland Mayor Michael Brennan. “Maine is struggling to build an economic base around science and technology, this is one step in the right direction. Maine must be more responsive to needs of the technology industry. Currently, Maine spends one sixth of the New England average on research and development.”

The University of New England’s Dr. Edward Bilsky echoed the sentiment, “Without the state’s investment in the infrastructure to expand UNE’s research capacity, not only would there be fewer research scientists living and working in Maine and fewer federal research funds flowing to Maine, there would be fewer jobs in the private sector supported by and supporting the research programs and UNE and other labs throughout the state. We encourage the Legislature, the Governor, and the voters of Maine to continue this critical investment.”

Businesses interested in innovation also attended the press conference and sent in letters of support. Clear H20′s Scientific Director Jay Palmer acknowledged that research and development drives innovation through already established educational institutions, “UNE’s quality work, expertise and guidance have been key factors in our product development process. Without UNE, we would be forced to go outside of Maine for similar services. It is no surprise that they continue to grow and expand in the area of biomedical research. UNE is truly a great asset for Maine and for companies like ClearH2O.”

In a report from University of Maine Economic Analyst Todd Gabe, the 95 million dollar bond package, of which 20 million is for research and development, will result in close to two thousand full and part time jobs over one year. Maine would also garner more than 40 million dollars in matching federal funds.

Pingree vigorously defended catch shares, saying, “It’s critical for coastal communities and working waterfronts that fishermen are allowed to utilize the best management tools for their particular fishery. Catch shares may not be the best option for every fishery, but that decision should be left to the industry, the management experts, and the scientists in their region where the fishery occurs.”

Currently fishermen have the option of adopting the new catch shares system instead of the old “days at sea” scheme, and last night Congressman Southerland introduced an amendment to prevent spending any funds on the establishment of new catch share sectors. Southerland described his efforts as “nothing less than a battle to prevent freedom in our oceans.”

Pingree cited the success of fishermen from Port Clyde in adopting the new management system.

“If the Port Clyde fishermen were up this late, which I feel confident they’re not, and they saw Congress debating the opportunity to take away this right that has been very successful for them, they would be shocked and angry and frustrated and down here tomorrow with their boats and their boots,” said Pingree.

Although the provision would not directly affect sectors that are already established—like the one that Port Clyde fishermen participate in—it would prevent new sectors from being created.

Southerland’s amendment passed in a close vote.

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