AUGUSTA — Budget negotiators appeared Tuesday to be closing in on a broader, bipartisan deal that would contain some level of income tax cuts but not a constitutional amendment sought by Senate Republicans as part of an earlier compromise.

Despite marked optimism on both sides, legislative leaders said the discussions remain “fluid” and cautioned that several key points of contention – including whether to apply the sales tax to more goods or services – have yet to be nailed down as lawmakers seek a deal capable of winning bipartisan support in both chambers of the Legislature.

“As an attorney, until you really get a deal done before the judge, you never really feel confident,” said Rep. Kenneth Fredette, R-Newport, the House minority leader. “I think we have a framework and that is important. I think we have made meaningful progress on all of those items within the framework, but until we get a deal done, then I think it is premature to talk about having something.”

Lawmakers have until June 17 or 18 to pass a budget in order to give themselves enough time to respond to a threatened veto from Gov. Paul LePage, a Republican whose original $6.57 billion budget proposal contained income tax cuts but also higher sales taxes. Failure to pass a budget would result in a state government shutdown at the peak of Maine’s summer tourism season.

While nothing is official, Republican and Democratic lawmakers appeared increasingly confident that any compromise will contain income tax cuts that were left out of the budget plan endorsed by the majority of members of the Legislature’s budget-writing committee last week.

“Everybody is working toward that,” said Sen. Dawn Hill, D-Cape Neddick, the assistant Senate minority leader. It remained unclear Tuesday, however, how large a tax cut would be in the final deal and whether it would apply to all income tax brackets.

Both sides have also endorsed preserving the “revenue sharing” program that sends tax dollars back to municipalities and to increase funding for K-12 education.

Hill declined to go into specifics about the latest tax cut figures being bandied about among the House and Senate leaders from both parties other than to say that under a plan now on the table, 90 percent of the income tax cuts would go to those in the “bottom 70 percent” of Maine’s income demographic.

Democrats have insisted they would not support “a tax giveaway to the rich,” while Republicans rebuffed an earlier Democratic plan that did not offer any tax relief to Mainers earning more than $150,000 a year.

“The one thing I can say is that everyone agreed it has to be paid for,” Hill said.

Under one scenario repeatedly floated by Democrats and Republicans alike, lawmakers would generate an estimated $80 million per year for income tax cuts by keeping the sales tax at 5.5 percent rather than allow the rate to drop back down to 5 percent on July 1, as currently planned. Additionally, Maine’s meals and lodging tax would rise from 8 percent to 9 percent to capture more revenues from tourists.

House Republicans have been resistant to broadening the sales tax by eliminating exemptions for good and services, as proposed by both LePage and Democratic leaders. Rep. Jeff Timberlake, a Turner Republican who serves on the budget-writing Appropriations and Financial Affairs Committee, said while expanding the sales tax would be a hard sell for him personally, he could not speak for the rest of his caucus on Tuesday. Timberlake supports increasing the meals and lodging tax, however.

One apparent casualty of the recent negotiations is a constitutional amendment – subject to voter approval – that would have required two-thirds of both chambers of the Legislature to approve any income tax cut.

Senate Republicans negotiated the constitutional amendment with Democrats as part of the budget plan endorsed by a majority of the Appropriations and Financial Affairs Committee members last week. But House Republicans rejected both the proposed amendment and the budget’s lack of income tax cuts and welfare reforms.

“I think we are missing an opportunity of a generation, but I understand that it just didn’t have the support of the House caucus,” said Sen. Roger Katz, R-Augusta, one of the two Senate Republican members of the appropriations committee who supported the compromise.

Republicans also sounded increasingly confident Tuesday that they will secure concessions from Democrats on welfare reform, particularly changes to the General Assistance program that provides emergency vouchers for housing, heat and other basic necessities.

“The will of the Maine people is that welfare needs to be reformed,” said Sen. Mason Garrett, R-Lisbon, the Senate majority leader. “Republicans have been fighting for that not only in the budget but all of the time.”

Of course, any agreement negotiated among members of leadership will have to pass muster with rank-and-file Democrats and Republicans in order to win the required two-thirds support in both chambers, which are controlled by different parties. And lawmakers cautioned that even the current generic agreement on cutting income taxes could unravel.

“That is today’s reality, which is different from yesterday’s reality (and) may be different from tomorrow’s reality,” Katz said.

Kevin Miller can be contacted at 791-6312 or at:

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