June 16, 2011

State budget taken to brink of final passage

Legislators of both houses reject last-ditch efforts to thaw frozen cost-of-living increases for retirees.

By Susan M. Cover scover@mainetoday.com
State House Bureau

AUGUSTA - The state's $6 billion budget for the next two years is poised for final passage in the Legislature today after getting strong support Wednesday in initial votes in the House and Senate.

click image to enlarge

Appropriations Committee House Chairman Patrick Flood asked legislators to reject all amendments to the “carefully crafted” budget.

2006 Press Herald file

The spending plan, calling for major reforms to the state retirement system, cuts to taxes and limits in welfare eligibility, could reach Gov. Paul LePage's desk sometime today. LePage said last week that he wants to give careful consideration to the budget before deciding whether to sign it into law.

While lawmakers debated some of the more controversial elements Wednesday, the House ultimately voted 120-26 in support of the bill. The Senate voted in favor, 29-6, on Wednesday night.

"We were able to craft a unanimous budget in the most difficult of times," Sen. Richard Rosen, R-Bucksport, said as the Senate debate began.

The budget went to the House and Senate with a unanimous endorsement from the Legislature's Appropriations Committee, after 110 hours of public testimony.

The House debated four substantive amendments, all of which were rejected. The Senate rejected seven amendments, some of which covered the same issues that were raised in the House.

Sen. Nancy Sullivan, D-Biddeford, a teacher who is retiring this year, criticized the budget for freezing cost-of-living increases for retired state workers and teachers, while giving tax breaks.

"We have balanced this on the backs of the retirees," she said.

Independent Sen. Richard Woodbury of Yarmouth said the bill, as proposed, "puts the greatest burden on those already retired or those on the eve of retirement."

Lawmakers in both chambers tried to boost cost-of-living increases.

Sen. Phil Bartlett, D-Gorham, and Rep. Maeghan Maloney, D-Augusta, offered similar amendments, proposing to raise the cap on cost-of-living adjustments for retirees by applying it to as much as $25,000 a year in retirement income, rather than $20,000 as proposed in the bill.

To pay for the increase, Maloney proposed taking $46 million from the state's wholesale liquor contract, rather than the $20 million in the committee's bill.

"I bet all of you have heard from a retired teacher or state employee this week," she said.

The Appropriations Committee's House Chairman Patrick Flood, R-Winthrop, said the $20 million payment was set at that amount to reserve more money for other projects in the future.

On another front, Rep. Anne Haskell, D-Portland, proposed to move $546,123 that was earmarked for State House security screening to beef up security at courthouses around the state.

"I find it astonishing we would do it first here," she said, "that we consider ourselves so important."

Sen. Elizabeth Schneider, D-Orono, offered the same amendment in the Senate.

Flood asked lawmakers to reject all amendments, saying the budget before them was a carefully crafted package that could not be unraveled. The House voted down Haskell's amendment, 83-65.

Rep. David Burns, R-Whiting, proposed additional steps to reduce welfare eligibility if federal approval is granted. He said Maine is more generous than most states with the types of benefits it provides.

The House overwhelmingly voted down that amendment.

Rep. Seth Berry, D-Bowdoinham, proposed changing the tax package to one crafted by Democrats. That, too, was rejected.

The budget endorsed by the Appropriations Committee includes several changes meant to reduce current and future costs of the Maine Public Employees Retirement System. The changes would save $334 million in the two-year period and cut an estimated $1.7 billion from the system's $4.1 billion long-term unfunded liability.

The budget would set the maximum cost-of-living increase at 3 percent a year for retirees, freeze the cost-of-living increase for one year and authorize payments to replace cost-of-living adjustments for two additional years.

The budget also would freeze state workers' salaries for two years and create a study group to consider an alternative pension system for future state workers.

Workers who now get longevity pay would continue to get it, while it would be frozen for newly eligible workers. There are no state government shutdown days in the budget.

The budget would cut income taxes by $91 million. The current 2 percent income tax bracket would go to zero, and the 4.5 percent and 7 percent rates would go to 6.5 percent. The top rate would decrease from 8 percent to 7.95 percent, and Maine would conform to the federal personal exemption and standard deduction.

The plan would eliminate the income tax for 70,000 low-income Mainers.

The Appropriations Committee also voted to increase the estate tax exclusion from $1 million to $2 million and give a tax break to people who withdraw money from retirement funds.

The plan also would allow nonresidents to work longer in Maine before they have to pay income taxes, and exempt aircraft and aircraft parts from the sales tax.

For health and human services, the budget would allow legal noncitizens who are receiving or have applied for help by July 1 to continue to get food stamps and federal cash benefits. It would remove an estimated 1,550 legal noncitizens from Medicaid health insurance if they have not lived in the United States for at least five years. Pregnant women and those under 21 would continue to receive health coverage, as mandated by federal law.

The budget also calls for a five-year lifetime limit on federal cash benefits for any welfare recipient in Maine, sanctions for those who violate the "family contract" they sign to receive benefits, and drug testing for applicants who have been convicted of drug-related felonies in the past 20 years.

MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at:

scover@mainetoday.com

 

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