Wednesday, June 19, 2013
Steve Mistler covers politics and government for the Portland Press Herald. He spends a lot of time in the hallways of the State House.
Fascinating discussion by the Legislature's budget-writing committee Tuesday night. For perhaps the first time in public (more on that later), the committee tasked with crafting an alternative to Gov. Paul LePage's proposed two-year budget tackled -- ok circled -- the elephant in the room: Taxes.
First, the big news (sort of).
Sen. Emily Cain, D-Orono, announced that Democrats, who control the Legislature, won't seek a repeal of the tax cuts passed, but still unpaid for, by lawmakers and approved by LePage in 2011. The cuts represent approximately $400 million of the estimated $800 million budget gap over the next two years. LePage's proposed budget is effectively designed to protect the 2011 tax cut with spending cuts, a two-year suspension of municipal aid and at least one subtle tax increase.
Here's why Cain's announcement was important. Democrats on the Taxation Committee last week reported that it would seek to delay portions of the tax cut package, a position that was presumed to be the position of Democratic leadership.
Ghosts of tax reform: The fate of L.D. 1496, the tax reform bill proposed by a bipartisan coalition of legislators seeking to overhaul Maine's tax code, is still in the hands of the Taxation Committee, which could vote to carry it over until next year.
However, it appears that some elements of the bill are being discussed by lawmakers negotiating a bipartisan compromise on the state's next two-year budget. Specifically, lawmakers are weighing whether two elements in the reform bill designed to provide property tax relief can be used as a budget solution.
The single biggest criticism of Gov. Paul LePage's proposed budget is his plan to suspend municipal revenue sharing, a plan opponents say will result in increased property taxes. The tax reform bill has two provisions designed to provide property tax relief, an increased homestead exemption and a circuit breaker program.
Geoff Herman, the lobbyist for the Maine Municipal Association, the organization representing the state's cities and towns, said Monday that Republicans on the budget-writing committee are discussing using the increased property tax relief in the tax reform bill to blunt the expected impacts of suspending revenue sharing. The rationale is that the homestead and circuit breakers programs are targeted property tax relief and perhaps more effective than simply allowing towns to spend revenue sharing as they see fit.
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.
Since everyone is on the edge of their seats about the status of Gov. Paul LePage's infamous television, here's an update: LePage has moved the TV out of the Hall of Flags and placed it above one of the doors to the governor's office. (There's usually a glass pane where the TV is now located.)
It's not clear whether the new location is in violation of the Legislature's rules that prohibit people from displaying political messages in the State House without first receiving permission from the Legislative Council. The rule prompted David Boulter, the executive director of the Legislature, to order LePage to remove the television. It was also the source of a clash between LePage and Democratic leadership, a fight that prompted the governor to declare that he was moving out of the State House.
On Tuesday it appeared that Democrats weren't going to make a stink about the television's new location.
Even before Democratic lawmakers passed -- and Gov. Paul LePage instantly vetoed -- a bill that would expand health insurance coverage for the poor, Republicans have signaled some potential alternatives.
House minority leader Rep. Kenneth Fredette, R-Newport, has proposed a study commission to weigh the impacts of Medicaid expansion. Skeptics immediately noted that study commissions are the graveyard for policy initiatives.
But Fredette has also hinted at a more substantive option, although he hasn't clearly articulated it. The Affordable Care Act will require most Americans to purchase health insurance and those that can't will receive federal subsidies through state-run exchanges, or insurance marketplaces, to help absorb the cost. To qualify for the subsidies, residents would have to earn between 100 and 400 percent of the federal poverty level.
Residents would have to earn below 138 percent of the federal poverty level to qualify for Medicaid expansion. Critics of expansion argue that the income threshold is a disincentive: If you know you'll lose health insurance if you make a dollar more than 138 FPL, what's the incentive to take a slightly higher paying job that may not offer health insurance?