The Maine State Capitol, photo by Ramona du Houx
Early Friday morning, Lawmakers on the Legislature’s Appropriations committee, where the budget is worked on, agreed to a budget proposal that would mitigate the impact of Governor Paul LePage’s two-year budget. Instead of delaying the tax cuts for the upper 2 percent of Mainers that Gov. Paul LePage pushed through last year there will be an increase of the sales tax by half a penny, the state’s meals and lodging tax will go up by 1 percent and corporate loopholes will be eliminated.
“You cannot demand all or nothing if you want to get something done,” said Rep. Peggy Rotundo, the House chair of the committee. “This is a budget that restores massive cuts to our towns, schools, and to funds that help our elderly and disabled get the care they need.”
The tax cuts passed in 2011 provides those earning more than $350,000 per year a tax cut of almost $3,000, while middle income families will see a return of a little more than $100, according to the Maine Center for Economic Policy.
The bipartisan proposal restores some cuts to Maine’s public schools, and towns, and to programs that help Maine seniors and people with disabilities pay for their care and medicine. It also restores merit and longevity pay as well as retiree health insurance to state workers while strengthening fraud protections in General Assistance. The panel also reversed LePage’s proposed cuts to property tax programs and replaced them with a “property tax fairness” exemption that will kick in automatically when people file their state taxes.
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Sen. President Justin Alfond at a Capitol press conference. photo by Morgan Rogers
Democrats urged Republicans to delay tax breaks for the wealthy to help balance the budget and avoid property tax hikes. The unfunded tax breaks, passed two years ago, were championed by Governor Paul LePage and the Republican-controlled Legislature, and mostly benefit the top 2 percent of Mainers.
“In order to pay for a tax break that largely benefits the wealthy, Governor LePage’s budget increases property taxes on the middle class and working people, on seniors and small businesses, on homeowners and renters,” said Speaker Mark Eves. “Putting these tax breaks for the wealthy on hold is the responsible option, we can’t just pass the buck.”
More than 60 towns and school districts have signed resolutions against the LePage budget. The Maine Municipal Association says the LePage budget is a $424 million shift to municipalities and property taxpayers.
Portland’s school district, yesterday, announced it had to cut almost 49 positions because of cost shifting cut backs.“This is regrettable news for our community but, sadly, not unexpected. The Governor’s budget proposes drastic cuts to education,” said Senate President Justin Alfond. “For too long we have asked our schools and teachers to do more with less. This is counterproductive to our collective goal of making our classrooms the best learning environment for our students.”
LePage’s budget cuts $50 million from public schools across Maine, including an additional $28 million shift forcing school districts to pay for the state’s share of teacher retirement costs.
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The Mayors’ Coalition today responded to Governor LePage’s recent letter inviting municipalities to contact him if we have “serious ideas for consideration” regarding the biennial budget. We are pleased to take the Governor up on his offer.
The bipartisan Coalition has offered three different suggestions “that are viable alternatives to the pending proposal.
“The Coalition proposed three options: raise taxes, raise taxes or raise taxes. How original,” said the Governor.
The three suggestions from the mayors to LePage are to suspend the pending Income Tax Cuts, Sales Tax Increase and Expansion and tax reform. The details are:
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The Capitol, Augusta, Maine. photo by Ramona du Houx
“The circuit breaker is the best program for reducing property taxes for Maine families who need it most,” said MECEP executive director Garrett Martin. “Most economists and tax policy experts share this view. Unfortunately, in recent years, reduced benefit levels and failure to streamline the application process and adequately publicize the circuit breaker’s benefits have undermined the program.”
The Maine Center for Economic Policy (MECEP) released a new report urging legislators to restore the 20 percent in refunds cut over the past four years to the Maine Residents Property Tax and Rent Refund Program, more commonly known as the circuit breaker program. Give Maine’s Working Families a Break: Fix and Fund the Circuit Breaker by MECEP economist Joel Johnson also calls for reforms to make it easier for eligible taxpayers to apply for refunds and for a public awareness campaign to encourage participation in the program.
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The Maine Legislature’s Taxation committee heard testimony on a number of income-tax related bills today, including several that would make Maine’s tax system more fair and help to close the state budget gap by reinstating the 8.5 percent tax rate for high-income filers.
“I pay a lot of tax. I should. I earn a lot. In the last two years the income taxes I pay in Maine have gone down … it has not made me go and open another car dealership, I have not gone out and bought another suit, or a boat, or a computer because of it. Lowering taxes for wealthy people and raising the property taxes for the rest of the population is not fair or right,” said Adam Lee, Chairman of the Board of Lee Auto Malls. “A strong middle class is not helped by tax breaks for the rich. We need to be able to continue to support our schools, fix our roads, and pay for the infrastructure for which each town is responsible.”
Other proposals include delaying the LePage tax cuts, which disproportionately benefit the wealthy, and a Maine Buffett Rule that would equalize the tax rates paid by Mainers for total state and local taxes. Rep. Seth Berry’s Buffett bill applies the logic of Warren Buffett, who has asserted that it’s wrong that his secretary pays a higher tax rate than he does.
“Maine now requires a single mother making minimum wage to pay a greater share of her income in taxes than a millionaire,” Berry said. “It’s time for us to end this basic unfairness in our tax policies.”
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The Taxation Committee on Friday rejected the proposed elimination of revenue sharing in Gov. Paul LePage’s $6.3 billion biennial budget.The panel voted 6-3 to remove the proposed elimination of revenue sharing from the budget because it would lead to property tax increases for residents. The proposed elimination of revenue sharing is part of the $425 million tax shift to municipalities in the LePage budget and drew intense opposition from municipal officials and property taxpayers.
Five Democrats on the committee, along with an unenrolled member, Rep. Joseph Brooks of Winterport, voted to remove the revenue sharing component from the budget. The three Republicans present voted against the motion.
Over the weekend LePage voiced his disapproval in his radio address declaring that his budget has been the target of Democrats.
“Even a former governor is on the attack. But these critics have yet to submit their own budget proposal,” said LePage.
In state government the governor proposes the budget. It is up to different committees to discuss the different elements of the budget and then to recommend the passage of those proposals, amend them or reject them. The budget appropriations committee is looking into different areas of potential consolidation that could be implemented.
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The state’s taxation committee unanimously adopted a bill sponsored by Senate Majority Leader Seth Goodall allowing visually impaired Mainers to qualify for a property tax exemption.
“The bill rectifies a serious omission in current statute,” said Goodall. “I am pleased to see my Democratic and Republican colleagues working together to ensure blind cooperative housing owners are treated no differently than anyone else.”
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Majority Leader Rep. Seth Berry has proposed a bill for tax fairness in Maine that would mirror the Buffet Rule. photo by Ramona du Houx
“This bill seeks to make our tax code fairer by correcting an imbalance that puts too much of the burden on lower- and middle-income Maine people,” said Berry. “People making more than $250,000 a year can afford to pay at least as much per dollar as those making $48,000.”
Taxation rates for the state’s highest-income households would come into alignment with the rates paid by all other Mainers under a measure proposed today by House Majority Leader Seth Berry of Bowdoinham.
Berry’s measure, LD 1113, “An Act To Provide Tax Fairness for Maine’s Middle Class and Working Families,” follows the same philosophy as the federal Buffet Rule: that everyone should pay their fair share. Under Berry’s bill, Mainers with annual incomes of at least $250,000 would pay at least the same effective rate in state and local taxes as the average paid by all other taxpayers.
Meanwhile Governor Paul LePage is raising taxes in order to pay for his income tax cuts, passed in 2011. LePage’s $6.2 billion two-year budget proposal cuts off all revenue sharing with municipalities and reins in two of the state’s main property tax relief programs, the Circuit Breaker refund and Homestead Property Tax Exemption. The proposal also ends the Business Equipment Tax Refund program, which reimburses businesses for equipment they purchase, and requires school districts to pay a much larger share of their teacher retirement benefits, and eliminates state revenue sharing.
How the LePage administration has outlined his objectives in this budget proposal amounts to over $400 million in a tax shift- or tax increase- to communities across the state because he can’t pay for his tax cuts enacted by the Republican controlled 125th Legislature. Revenues from Berry’s measure. estimated at $200 million in the first biennium, would fill half the budget gap created by new tax cuts largely benefiting the wealthy.
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During the last session of the Maine Legislature, Gov. LePage and the Republican majority of the Maine Legislature passed the largest tax cut in Maine’s history. Wow, doesn’t that sound great. We should all throw kudos at him. Wait a minute, the biggest benefactors of that cut were the 1 percent of who are the wealthiest Mainers. For the vast majority of us, we got the crumbs.
Surprise! He is now operating the state with a shortfall of tax revenue. Why am I not surprised? He apparently doesn’t care as his budget proposal ends what was helpful to those of us property tax payers at the municipal level. Property tax is the most regressive tax there is for it matters not if you are on a fixed income. Apparently, he doesn’t care, as long as he’s taking care of his rich buddies. Well I do care as we are in desperate need of a fair share economy!
When the mayors of Lewiston and Auburn were questioned about the governor’s budget, this is some of what each had to say. In the Sun-Journal, 1-16-13, Auburn Mayor Jonathan LaBonte was quoted as saying “the budget discussion could make it the perfect time to reconsider sharing services with Lewiston.” Mayor Robert MacDonald, a staunch supporter of Governor LePage, was quoted as saying: “The state is broke,” Macdonald said. “We can play the blame game back and forth, but that is not going to put money in the coffers, I’m not going to sit up there and preside over a crying contest.”
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President Barack Obama speaks about the bipartisan deal that will raise taxes on the top 2 percent, amongst other measures
“A central premise of my campaign for president was the change the tax code that was too skewed toward the wealthy at the expense of working, middle-class Americans. Tonight, we’ve done that,” said President Barack Obama.
Congresswoman Chellie Pingree and Congressman Mike Michaud voted tonight for a compromise proposal that will extend lower tax rates for nearly all Maine families, extends unemployment benefits, avoids a dramatic increase in milk prices and will require millionaires and billionaires to pay more tax revenue. The House approved the deal 257-167 late Tuesday night.
“This bill was far from perfect, but it reflects a true bipartisan compromise to ensure that all middle and lower-income Americans do not see their income tax rates increase. State officials have said that without legislation to prevent a tax hike, Mainers would have paid $1.4 billion in additional taxes in 2013 alone,” said Congressman Mike Michaud.
“The bottom line for me was an agreement that protects working families from a big tax increase, keeps milk prices from going through the roof and doesn’t pull the rug out from under people who are still struggling in this economy,” said Congresswoman Chellie Pingree.
The bill includes an extension of important Farm Bill programs, including the Milk Income Loss Contract program that’s critical to Maine’s dairies.
“It was critical to extend the dairy programs so families aren’t paying $7 or $8 a gallon for milk,” said Pingree about the Farm Bill extension. “But Congress needs to use the next few months to pass real farm policy reform that supports and expands local agriculture and creates a sustainable food policy for the country.”
The bill Pingree voted for reduces taxes for 98 percent of Maine families and 97 percent of Maine small businesses, preserves long term unemployment insurance for thousands of Maine people who are still searching for work and extends tax breaks for families paying for childcare and college tuition.
“This bill provides certainty and predictability to Maine families by making permanent the income tax rates, the Alternative Minimum Tax fix, and the estate tax rate and exemption level. It will help to sustain our economic recovery by extending the New Market Tax Credits, the Earned Income Tax Credit, and other tax provisions that benefit our families and create jobs in Maine. It also prevents Medicare providers from facing an unsustainable 27 percent reduction in reimbursement rates,” said Michaud.
The bill also extends a tax credit for new wind energy projects.
“The wind industry supports thousands of jobs in Maine and letting the wind energy tax credit expire would pull the rug out from under countless new wind projects and probably put Maine people out of work,” said Pingree.