May 17, 2012

Legislature OKs bill to gradually lower state income tax

By Glenn Adams, Associated Press

AUGUSTA — Working toward the close of the 125th Legislature, Maine lawmakers gave final approval Thursday to a Republican-backed bill to gradually lower the state income tax rate to a flat 4 percent.

The legislative action in the early-morning hours came amid traditional speeches highlighting bipartisan successes and expressing farewells as lawmakers completed the business of their two-year session but left open the possibility of a return if Gov. Paul LePage vetoes legislation.

The tax cut, sent to LePage, would gradually lower income tax rates to a flat 4 percent from the current 8.5 percent, due to drop to 7.95 percent in January. In part, the cut is possible because of an income tax relief account in the state's rainy day fund.

Minority Democrats argued against the bill, saying the account would not sufficiently cover the cost of a tax cut and the relief would leave the next Legislature with a whopping bill to pay.

"This isn't a tax cut. It's a tax shift, and it's a sham," Sen. Philip Bartlett II, D-Gorham, said during debate. "This is nothing more than credit card politics."

Senate Majority Leader Jon Courtney, R-Springvale, said it was the previous Democratic majorities who had left a budget shortfall of more than $1 billion when the GOP assumed control of the State House in 2011.

"We're going to be lectured by the people who created a $1.3 billion structural gap? I don't think so," Courtney said. "This is not a shift. This is just a commitment the Legislature ought to be making."

During the two-year session, lawmakers overhauled health insurance laws, cut state debts, passed highway safety laws including a texting-while-driving ban, reduced the social service rolls, took steps to curb domestic violence, and enacted regulatory changes.

"For the most part, we have done a good job," said Senate Minority Leader Barry Hobbins, D-Saco, who has reached his four-term limit in the Senate.

Stopping short of final adjournment Thursday, legislative leaders left open the possibility of calling back lawmakers to take up any vetoes. LePage signed the budget bill before leaving Wednesday for a Republican Governors' Association meeting in North Carolina. It closes an $80 million shortfall in the state Health and Human Services Department budget and includes a number of cuts in Medicaid benefits to bring the program more in line with what the governor said the state can afford.

The governor has 10 business days including Saturdays to veto bills. LePage's office did not know Thursday of any particular measures the governor plans to veto. Speculation in the State House was that bond issues in the nearly $96 million package approved Wednesday would be the most likely candidates.

Asked if any of the bonds faced likely vetoes, LePage spokeswoman Adrienne Bennett said: "We'll address that later."

LePage is wary of adding more debt to the state's obligations. The bond issues, which would go to voters in November, seek funding for transportation, state colleges and universities, research and development, clean water and conservation programs.

House Democratic Leader Emily Cain of Orono and House Speaker Robert Nutting, R-Oakland, agreed that LePage's actions will determine whether legislators return to the State House.

"There are a number of bills the governor is going to get for the first time. He'll get to see them as soon as he gets back from his trip. So early next week we expect to have an indication of whether we'll need to come back for a day," Nutting said.

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