July 1, 2013

The state budget: 5 things you need to know

You will feel the effects of the financial plan approved by the Legislature last week. Here's a glance at you can expect.

By Michael Shepherd mshepherd@mainetoday.com
State House Bureau

and Matt Byrne mbyrne@pressherald.com
Staff Writer

After months of partisan squabbling and political maneuvering in Augusta, a new two-year, $6.3 billion state budget begins to take effect Monday.

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And, sometime soon, we all will feel the impact.

Maine's new budget means you will soon pay more for a television, a dinner out and a newspaper -- although not until the approved tax increases kick in this fall.

While some fear those added costs will encourage you to eat out less often or go to New Hampshire to buy tax-free appliances and other things, lawmakers decided it was a necessary burden for us to bear in order to balance the two-year budget and reach a compromise that kept the state government from shutting down on Monday. And, according to the Legislature, the tax increases will go away at the end of the two-year budget cycle.

Meanwhile, if you are a state employee or are supported by one, the new budget means you will see some new savings in your health insurance. And many state workers will soon get their first merit raise in five years because of the budget.

Some of the budget's biggest impacts on Maine families are still unknown, however.

Communities and school districts are now looking at the numbers in the final state budget to figure out how they might affect local property taxes, muncipal services and classrooms. That's because the budget increases some funding for schools, reduces funding for towns and cities and shifts other expenses from the state budget to the local budgets.

The impact, once it all settles out, will vary from town to town.

While many communities will have to choose between property tax increases and spending cuts because of big drops in state revenue sharing, a lot of school districts will have to decide what to do with state funding that they didn't expect to receive.

The details of the budget include many impacts on targeted groups and services.

About 3,100 severely disabled Mainers won't have to spend as long on a waiting list for services, for example. And anyone who wants to run for the Legislature to help pass the next state budget will find money in this budget to pay for a publicly funded campaign.

Here are five things you need to know about how the state budget will affect you.

1. Meals and lodging

You'll feel the impact of the new budget when you go out to eat or rent a hotel room. But not right away.

An increase in the state meals and lodging tax will take effect Oct. 1, rising from 7 percent to 8 percent.

That means a $40 restaurant dinner for two will cost $43.20 before the tip, up from $42.80 now. At the Atlantic Oceanside Hotel and Conference Center in Bar Harbor, a $229 suite with a king-size bed and patio would cost just over $247 before fees, up from just over $245 now.

Raising meals and lodging taxes is often seen as a way to shift the burden of paying for state services to tourists and out-of-staters. But industry representatives say it hits Mainers hard, too.

Greg Dugal, executive director of the Maine Innkeepers Association, said 64 percent of lodging taxes were paid by out-of-staters in 2012, while 70 percent of meals taxes were paid by Mainers.

Dick Grotton, executive director of the Maine Restaurant Association, said the increase could cost restaurants money to change software that calculates the amount, but members' reactions to the increase vary.

(Continued on page 2)

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