AUGUSTA — With the hours dwindling before a potential state government shutdown at midnight Friday, legislative leaders are mulling the latest offer to end the stalemate over Maine’s next two-year budget.

The proposal assembled by the Republican majority in the Senate includes a funding increase for public schools of $146.7 million, which is $35 million more than Republicans previously had offered.

The new offer also bumps Maine’s sales tax on hotel and motel lodging from 9 percent to 10 percent to generate additional revenue. That sales tax also would be applied to campground visitors.

Although House Speaker Sara Gideon, D-Freeport, said the difference over education funding that separates Democrats and Republicans is “negligibly small,” the Republican proposal has yet to win approval from Democratic negotiators, and discussions were ongoing. Gov. Paul LePage, meanwhile, issued a memo to more than 10,000 state employees Wednesday afternoon advising them on how the shutdown process will play out if a budget is not in place before the new fiscal year begins Saturday.

“With each passing hour, it seems as though the preparations our administration has made over the last two weeks are less an exercise in caution and more likely plans that may need to be implemented,” the Republican said in the memo. “While I have no desire to see state government shut down, good governance requires our administration be prepared for the possibility that July 1 may arrive without a budget.”

The issue of school funding has been a key sticking point as some lawmakers look to repeal a 3 percent surcharge on household income over $200,000 that was enacted by voters last fall. Republicans argue that the surcharge, which LePage has taken to calling a “surtax,” is damaging to many small businesses in Maine and will drive high wage-earners away while making it harder to recruit skilled professionals.

‘THE GAP IS NARROWING’

Sen. President Mike Thibodeau, R-Winterport, said the latest proposal includes things that the four negotiating caucuses – House Republicans, Senate Republicans, House Democrats and Senate Democrats – have said they want to see in a final package. The school funding amount falls significantly short of House Democrats’ original demand that the budget include an amount equal to what would be raised by the surcharge, an estimated $320 million over the two-year budget.

House Democrats previously have said they would settle for an additional $200 million for schools. The surcharge was added by voters to ensure that the state funds public schools at 55 percent of their costs, a level of support that was mandated by voters in 2004 but has never been attained.

The Republican offer also includes $15 million in new funding to boost the wages of direct-care workers employed in group homes for the developmentally disabled who are reimbursed through MaineCare.

Details of the offer were released during a meeting of a six-member budget panel that was formed to negotiate a deal when talks on the budget-writing Appropriations Committee reached a stalemate this month. The panel, which was empowered to work for only 10 days, was reappointed in a vote Wednesday by the Legislature.

Thibodeau, Gideon, Sen. Roger Katz, R-Augusta, Sen. Cathy Breen, D-Falmouth, and Reps. Aaron Frey, D-Bangor, and Tom Winsor, R-Norway, sit on the panel.

“There ought to be a clear message, and that’s ‘that the gap is narrowing,’ ” Thibodeau said. “We hope this proposal will be a catalyst to getting this done and avoiding a shutdown, which none of us want to see happen.”

Gideon thanked Thibodeau and Katz for the latest offer, and noted that she and fellow Democrats were pleased to see the increased funding for group home direct-care workers because a severe shortage of workers was emerging.

“This helps us move forward,” Gideon said. She said lawmakers would still need some time to “digest” the latest offer, but agreed that lawmakers need to move quickly if they hope to have a budget bill to vote on by Friday.

Wednesday evening, she told House members they would vote Friday, but warned that if those votes fail “folks should expect we will be here every day until we pass a budget.”

The Legislature needs a budget that can gain two-thirds support in both chambers in order to become law by the end of the fiscal year at midnight Friday. The two-thirds majority is needed to overcome a likely veto by LePage, who has said he will reject any bill that doesn’t repeal the 3 percent income tax surcharge or that exceeds $7.055 billion in total spending.

The latest proposal by Senate Republicans also eliminates a $1 million legal defense fund that LePage had requested in his budget.

DESIGNATING ‘EMERGENCY’ WORKERS

In his memo to state employees, LePage said that in the event of a shutdown, he will declare a civil emergency and work with his commissioners to decide which state employees are necessary to provide “emergency services.” To determine those positions, LePage will use the standard employed by Gov. John McKernan during the last partial government shutdown in 1991.

That policy reads: “Only those persons employed by the state whose duties and functions minimize the risk of direct and imminent injury to persons, or minimize the risk of direct, imminent and substantial harm to property, or that serve to repair any such injury to persons or harm to property, or are essential to completing that portion of the lawmaking process that will relieve the state of emergency, or whose functions are necessary or appropriate to meet additional needs covered by the (Maine Emergency Management Act), shall be allowed to report to work and perform their assigned tasks.”

LePage’s communications office said Wednesday that the list of employee classifications deemed to be “emergency” and “non-emergency” positions probably would be released Friday. All state employees considered “emergency employees” are required to report to work and will be paid or compensated, but not necessarily immediately. “Non-emergency employees” are not permitted to work during a shutdown and will not be paid.

Although the governor’s memo to state employees was largely devoid of political rhetoric, a statement sent out along with the memo Wednesday squarely blamed Democrats and “radical activists” and “extremist environmental organizations” for the budget impasse.

“House Republicans are willing to negotiate and invest additional education funding, but the Democrats are still dug in,” LePage said in the statement. “Instead of voting on a budget to benefit the Maine people, Democrats are bowing to the demands of labor unions, radical activists at the Maine People’s Alliance and extremist environmental organizations. “Democrats should have the courage to compromise in the best interest of the Maine taxpayers and residents who will foot the bill for the budget,” he said. “If state employees are concerned about a potential shutdown, I urge them to call the speaker of the House and tell her to pass a fiscally responsible budget today.”

Scott Thistle can be contacted at 791-6330 or at:

sthistle@pressherald.com

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