Tuesday, March 11, 2014
Democrats in the Legislature have been repeatedly challenged to offer an alternative to Gov. Paul LePage’s budget proposal, a two-year plan that suspends municipal revenue sharing and other controverial initiatives that critics argue will result in a $400 million tax shift to property taxpayers.
To this point Democrats have offered only opposition to the governor's budget. That may soon change.
On May 21, the Taxation Committee made its draft recommendations to address the most contentious parts of the governor’s budget. Leading the list: Delaying the 2011 tax cuts that LePage’s budget is designed to protect.
Some of the recommendations could foreshadow the Democratic majority’s official counter proposal.
On party line votes, the Democrats on Taxation proposed a series of initiatives:
* Delaying implementation of several of the tax cuts enacted by the Legislature in 2011 until Jan. 1, 2016.
* Delay the estate tax exclusion to $2 million that began Jan. 1 for an estimated $20-$30 million in revenues.
* Retain the tax changes that removed the tax liability for approximately 70,000 low-income Mainers.
Democrats on the committee argued that delaying the cuts would save the state $400 million in revenue for the upcoming budget, thus allowing the Legislature to avoid revenue sharing cuts that municipalities have lined up to oppose.
Democrats on Taxation offered a series of other options, including enacting “tax equalization” that would increase taxes on Maine’s top earners by imposing the so-called “Buffett Rule.” Democrats suggested L.D. 1113, a measure sponsored by Rep. Seth Berry, D-Bowdoinham, the House majority leader.
Other Democratic options included increasing meals and lodging taxes from 7 percent to 10 percent (Democrats weren’t unanimous on the increase, some suggested 9 percent.); higher cigarette taxes; e-fairness legislation to capture tax revenues lost to online retailers.
The politics of the committee recommendations will be interesting if they become the Democratic majority’s official position. Democrats, after all, supported the 2011 tax cuts when they were in the minority. It could be tricky to advocate for the delay of the cuts while proposing additional revenues.
Republicans could also find themselves in a difficult spot.
Republicans on Taxation rejected the Democratic majority’s recommendations, or any additional tax increases to fill the $400 million budget hole created by the 2011 tax cuts. However, they agreed that restoring revenue sharing, the homestead exemption and the circuit program -- cuts that LePage has proposed in his budget -- should be a priority. They argued that the funding could be preserved through spending cuts, but didn't identifying any.
It's not up to the Taxation Committee to find spending cuts, but if the Republican minority doesn't support delaying the tax cuts or the cuts in LePage's budget, it may be difficult being against both.
Steve Mistler covers politics and government for the Portland Press Herald. He spends a lot of time in the hallways of the State House.