The first regular session of the 127th Maine Legislature has offered its share of both triumph and defeat for industries in the state, with most lobbyists characterizing the outcome as something of a wash.

Lobbyists counted a compromise on sales tax increases among their victories, while lamenting the lack of legislative action on a state minimum wage.

A number of issues remain unresolved, such as a fight over 70 bills being held by Gov. Paul LePage that Democrats say are now law and the LePage administration says the governor still has time to veto. The dispute is expected to wind up in court.

Even the defeat of several bills to increase Maine’s $7.50 hourly minimum wage could ultimately backfire on the industries that opposed them because of a voter referendum drive underway to increase the minimum to $12, more than what most lawmakers had proposed.

More than anything, industry representatives said they were frustrated by the contentious nature of the session and the failure of liberals and conservatives to reach workable compromises on issues such as the minimum wage and tax reform.

“We went into this session thinking that it was a real source of opportunity,” said Dana Connors, president of the Maine State Chamber of Commerce. “This session didn’t hold up to its promise.”

TAXES: INCOME, SALES AND OTHERWISE

Lobbyists who opposed significant tax increases on goods and services were facing a governor who wanted to eliminate the income tax altogether and make up for it with sales and service tax increases. They were moderately successful at holding the line, although they did not get everything they wanted.

The budget includes an income tax cut paid for with changes to the state’s sales, service provider, meals and lodging taxes. The 5.5 percent sales tax was set to decrease to 5 percent July 1, but the new budget retains the 5.5 percent rate to help fund the income tax cut, which will be phased in over the next two fiscal years.

A failed tax reform plan championed by LePage would have increased the sales tax to 6.5 percent and broadened it to include dozens of now-exempt goods and services.

The service provider tax also will increase from 5 percent to 6 percent beginning Jan. 1 under the new budget.

The 8 percent meals tax was scheduled to fall to 7 percent on July 1, but the budget maintains the 8 percent rate for both meals and lodging taxes until Dec. 31, then increases the lodging tax to 9 percent in an attempt to capture more revenue from tourists. Hospitality and restaurant industry lobbyist Greg Dugal said his organization had fought to keep both meals and lodging taxes at 8 percent. Democrats initially sided with the industry, while Republicans sought to increase both meals and lodging taxes to 9 percent.

“We had one victory and one loss,” said Dugal, who is executive director of the Maine Innkeepers Association and president and CEO of the Maine Restaurant Association.

Most industry lobbyists said they were relatively pleased with the state’s new two-year, $6.7 billion budget, which increases the homestead exemption, boosts education funding and provides $135.4 million in tax cuts by 2017.

BONDS: A DROP IN THE BUCKET

Given the difficulties that state elected officials faced during the session – including a governor who at one point vowed to veto all bills – the Legislature still managed to pass some measures that industry lobbyists described as helpful to Maine’s economy.

Those included a bill that will ask voters to authorize $85 million in transportation bonds for road and bridge projects, and another that seeks voter authorization to borrow $15 million to help pay for affordable senior housing across the state. Both passed with strong bipartisan backing.

Still, the $100 million total value of those bonds is a small fraction of the more than $900 million that various interests were seeking, including bonds for rural and municipal broadband Internet infrastructure, university research, technology grants, workforce training and major business-development projects.

Matthew Marks, CEO of the Associated General Contractors of Maine, said lawmakers took a positive step by authorizing the road and housing bond measures during a highly contentious legislative session. However, he said the dollar values are not sufficient to overcome Maine’s serious transportation and housing problems.

“The missed opportunities were probably the amounts,” Marks said.

NEW MARKETS TAX CREDITS

The Maine New Markets Capital Investment program, which offers tax credits to investors in businesses in low-income communities, was at the center of a debate this session that began after an examination by the Portland Press Herald detailed how nearly half of what has so far been invested in low-income communities – about $91 million on paper – never made it to the designated companies for new upgrades or expansions. Instead, the money was used to pay off old loans or stayed on the books for less than 24 hours through the use of a financial tool known as a one-day loan.

A bill, L.D. 297, would have expanded the state’s New Markets program, which is nearing its statutory cap, by doubling the amount of available tax credits from $97.5 million to $195 million. But support for that bill collapsed after the Press Herald published its examination. Democrats on the Legislature’s labor and economic development committee voted to block expansion of the program and close the one-day-loan loophole. Republicans also wanted to close the loophole, but didn’t want to kill the program. The stalemate led to the bill dying, which leaves the program and the one-day-loan loophole intact.

The controversy over the tax credit program cast a long shadow this session, said Martin Grohman, an entrepreneur and Democratic state representative from Biddeford.

“It really has had a far-reaching impact,” he said. “When anybody hears ‘tax credit’ they go, ‘Oh, get rid of it.’ We’re in the situation now that good business policy, good entrepreneurial policy is getting painted with that brush.”

He likened it to getting a hit song stuck in your head and not being able to stop singing it.

“I think the hit song for a lot of us this session was around naive legislators approving southern lawyers’ tax credits, and I really wish I had found a way to work harder to change that narrative,” Grohman said.

HEALTH CARE AND VACCINES

The health care industry fared relatively well in the budget, which maintained state Medicaid subsidies for primary care physicians, said Andrew MacLean, deputy executive vice president of the Maine Medical Association.

“The governor agreed to put some state money in to keep enhanced rates,” he said.

Another win was the failure of two anti-vaccination bills, MacLean said, one of which would have made unvaccinated residents a legally protected class, and another that would have created a new state Department of Health and Human Services office to deal with “supposed vaccine injuries.”

Still, a third bill that the medical association favored would have required physician approval for a patient to avoid being vaccinated. It barely fell short of the votes needed to survive LePage’s veto, he said.

“That was kind of a mixed bag for us,” MacLean said about the three bills.

MINING AND TOXINS

In general, the lobbyists said they were as thankful for bills that didn’t pass as they were for ones that did.

“Every session, for organizations like ours, you play defense and you play offense,” the state chamber’s Connors said. “It’s harder to play offense because there’s more risk.”

One defensive victory for the chamber was the defeat of a bill that would have expanded Maine’s regulatory authority to ban certain toxic substances, which Connors said was unnecessary and would have created a more uncertain environment for businesses that work with chemicals.

Still, the chamber also failed to lobby successfully for a hotly debated bill that would have rewritten Maine’s metal mining regulations to allow the mining of Bald Mountain, which is rich in precious metals.

Another bill the chamber supported would require an updated strategic plan to expand broadband access in Maine and stronger efforts to support community broadband planning efforts. That bill is being held over to the next session.

MANUFACTURING: A MIXED BAG

Manufacturers were watching several bills this session, including one that called for increased regulatory oversight from the federal Occupational Safety and Health Administration around reporting injuries, which they opposed, but it passed and survived the governor’s veto. They were disappointed also in the failure of a bill prohibiting a person from being required to join a labor organization or pay union dues or fees as a condition of employment. Commonly called a right-to-work bill, it failed both houses, despite the governor’s pronouncement that the change is crucial if Maine wants to attract new investment.

But manufacturers were happy that a bill creating a loan repayment program for students who are pursuing degrees in the science, technology, engineering and math fields passed.

“(The bill is) good for manufacturers that are desperate for quality employees in STEM industries throughout Maine,” said Derek Volk, CEO of Volk Packaging in Biddeford and head of the legislative committee of the Manufacturing Association of Maine.

MINIMUM WAGE INCREASE

Volk said manufacturers were also opposed to minimum wage increases because of the ripple effect they anticipate would occur throughout the industry. Retailers were hoping for a compromise bill on minimum wage that would have raised it statewide in small increments, but that effort failed, said Curtis Picard, executive director of the Retail Association of Maine.

The failure to reach a deal on minimum wage boosts the prospects of a referendum drive by the pro-labor Maine People’s Alliance. The referendum, intended for the 2016 ballot, would raise the minimum wage in Maine from $7.50 to $9 an hour in 2017 and then by a dollar a year until 2020, when it would reach $12 an hour and then be indexed to the cost of living for future years.

The Portland City Council passed a city minimum wage that will be $10.10 starting Jan. 1, rise to $10.68 a year later and then tie future annual increases to inflation. And a group calling itself Portlanders for a Living Wage filed more than 3,000 signatures with city officials in June to get a $15-per-hour minimum wage referendum on the ballot this fall.

Picard said he was disappointed that state lawmakers were unable to work together on the wage issue to avoid aggressive or piecemeal increases via voter referendum.

“We were hopeful that there was going to be a lot more compromise,” he said.

UPS AND DOWNS FOR INNS

An offensive failure for the Innkeepers Association was the so-called “Airbnb bill,” which would have required the vast majority of those offering short-term residential lodging to obtain innkeeper’s licenses from the DHHS Division of Licensing and Regulatory Services, Dugal said. It failed in large part because the requirements also would have applied to Maine’s decades-old vacation rental industry.

Other measures that failed were ones the industry opposed, such as a bill that would have eliminated the tipped-wages credit for businesses with employees who receive tips, including at hotels and restaurants.

“We had some successes, we had some failures, and all in-between,” Dugal said.

Staff Writer Whit Richardson contributed to this report.