AUGUSTA — Gov. Paul LePage made a forceful case for his $6.3 billion budget and proposed tax overhaul during his State of the State address Tuesday to a joint session of the Legislature.

The governor used his 47-minute speech to outline the budget and tax code changes he says are essential to creating a “pathway to prosperity,” echoing other Republican governors who have advanced similar tax initiatives. The address also marked the beginning of the LePage administration’s intensified public campaign for the two-year spending plan, in which the governor will be the lead pitch man.

To underscore his commitment to cutting taxes and reassure Republicans that his budget does that, he vowed to introduce a proposal to change Maine’s Constitution to direct future revenue growth toward eliminating the income tax.

The reaction from lawmakers was attentive but subdued. Republicans, who have the majority in the Senate, saved most of their standing ovations for the governor’s remarks about changes to welfare programs and drug enforcement, and his pledge to eliminate the income tax.

Republicans, however, find themselves in a difficult position. They have been asked to support an increase and broadening of the sales tax that is similar in concept to a 2009 tax reform initiative that the Maine Republican Party helped overturn at the ballot box in 2010.

For that reason, the sales tax increase and taxing of goods and services is considered one of the boldest and most contentious proposals in LePage’s budget.

The governor directly addressed the political difficulty facing his proposal, saying the budget isn’t a “Band-Aid to get us through the next budget cycle,” but will “drive prosperity for decades.”

“Studies sit on shelves, collecting dust,” he said. “Politicians talk about reforming our tax code every year, but nothing meaningful gets done.”

He added, “We must make hard decisions today so we can have prosperity tomorrow for our future generations.”

The address was aimed at the lawmakers who will ultimately decide the final composition of his budget. However, he also struck a populist tone, saying his plan would deliver tax relief for working-class Mainers while removing exemptions on services largely consumed by tourists.

“My fellow Mainers, you work hard for your paycheck,” he said. “The government takes your earnings and you have no control over how it is spent. You earned it. You should keep it.”


Democrats, who hold the majority in the House, have focused most of their opposition to the governor’s budget on a proposal to eliminate a 42-year-old revenue sharing program used by municipalities to pay for services such as police, fire and road repairs. Early analysis suggests that the proposal and a corresponding plan to remove property tax exemptions for large nonprofits will benefit service center communities, while rural towns with no taxable nonprofits could need to increase property tax rates.

Senate Minority Leader Justin Alfond, D-Portland, called it “a fine speech” that was markedly more bipartisan than LePage’s previous State of the State addresses. But Alfond and other Democratic leaders said the governor’s proposals could hurt the middle class and drive up property taxes in another attempt at failed “trickle-down economics.”

“When I think of a State of the State, I think you are really laying out a blueprint for the next four years and beyond,” Alfond said. “What I heard was basically a ‘State of My Income Tax’ proposal. And that’s fine, but I think he really left out some big parts … and that is what the session is about, to try to address those gaps with the governor and our Republican colleagues.”

Democratic leaders also have begun to sound the alarm on the governor’s income tax cuts, arguing that his proposal would disproportionately benefit wealthy Mainers. They also warn that lower state revenues in the next biennium would inevitably lead to cuts in education spending.


LePage defended the revenue sharing elimination, saying the state’s current property tax relief programs are a failure. He said the Maine Municipal Association, the organization representing Maine cities and towns, is working to defend the program because it isn’t interested in lowering taxes.

“I think we should call them the Middle Man Association,” LePage said, adding that his plan would deliver property tax relief directly to Mainers instead of leaving those decisions to municipal officials.

He also continued his focus on immigration, suggesting that illegal immigrants and asylum seekers should be required to undergo medical examinations to avoid the spread of infectious diseases in Maine. The governor made similar statements last fall, prompting strong criticism from groups that work with the growing population of legal asylum seekers in Portland and southern Maine.

Republican leaders applauded the governor’s speech even while acknowledging the tough road ahead in their caucus.

“It’s about reducing the overall tax burden,” said Senate President Mike Thibodeau, R-Winterport. “We have to make sure that whatever we do has a positive impact on the state of Maine moving forward. I think the governor gets that. It’s going to be an interesting debate.”


LePage isn’t the only Republican governor pursuing tax increases to pay for a decrease in income tax rates.

More than a dozen of them have either proposed or are in the process of advancing tax changes that seek to reduce income tax rates and pay for the change by raising rates on other revenue. Arizona Gov. Doug Ducey, who shares LePage’s goal of eliminating the state income tax, is paying for a decrease by eliminating more than 100 sales tax exemptions.

So is LePage, who has proposed taxing currently exempt services such as attorney fees, haircuts and amusements, and removing exemptions for peanut butter, but not bread and jelly.

Ohio Gov. John Kasich has pursued a similar strategy, and South Carolina Gov. Nikki Haley has proposed a gas tax hike to offset reducing the top state income tax rate from 7 percent to 5 percent.


While the budget is a hot topic in the State House hallways, few lawmakers have staked out strong positions for or against LePage’s sweeping proposals. And some lawmakers have said they are hearing relatively little back home in their districts.

“I am surprised at how quiet it has been,” said Sen. James Hamper, R-Oxford, who as co-chair of the Appropriations and Financial Affairs Committee will be playing a lead role in crafting a budget from LePage’s proposal. “Nobody is calling me at home and yelling at me. I stopped by a Chamber of Commerce to put my finger in the air and … crickets.”

“I don’t think people have a good understanding yet about how this proposed budget is going to affect them,” Hamper said.

LePage concluded his speech with his plan to introduce a constitutional amendment to eliminate the income tax. Last year, Georgia became the first state to enshrine an income-tax rate cap in its state constitution. It was overwhelmingly approved by voters in November.

The governor’s proposal could face a tough test. It will first require two-thirds support of the Senate and House before going to voters for final approval.

Staff Writer Kevin Miller contributed to this report.


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