AUGUSTA

A panel that’s been tasked with finding savings in Maine’s tax code laid out its preliminary recommendations on Monday for scaling back tax incentive programs for businesses, historic building restoration projects and student loan repayment.

A special group of lawmakers, economists and business experts has been working this fall to come up with $40 million in savings in the state’s budget to forestall automatic reductions to municipal revenue sharing, which has already faced significant cuts. Monday’s recommendations provide a glimpse into the programs that could be on the table for reductions when lawmakers return in January.

Among the recommendations is to cap a tax credit program that reimburses workers for student loan payments who chose to live in Maine after graduation in order to save nearly $2 million in the state budget.

But the pushback against the proposal, as well as several others considered Monday, signals the difficulty that the Legislature will have in reducing or eliminating tax incentive programs on the books.

Sen. Roger Katz said reducing the amount of money available to reimburse student loan payments is a bad idea in an aging state that’s trying to find ways to keep younger people in the job force.

“How can we keep more of our young people here and attract more young people to move here? This is one of those ways and it’s very difficult to talk about cutting this program,” said the Republican senator from Augusta.

The panel also recommended limiting tax credits for the restoration of historic buildings and cutting a tax reimbursement program aimed at encouraging Maine businesses to hire new employees. Another recommendation would eliminate a local property tax reimbursement program for some retail stores, which is expected to save around $3 million.

The recommendations will now go to the state’s budget writing committee, which will decide which proposals should go forward to reach the $40 million in savings.

Several members of the panel said that while reducing tax incentives may be challenging to implement, the alternative — further cuts to municipal revenue sharing — would be far worse.

“We have to view those proposed changes and their impacts against what the potential result of inaction would be … that likely translates into higher property taxes and more reductions to services provided by government,” said Garrett Martin, executive director of the Maine Center for Economic Policy and a member of the task force.

Republican lawmakers, who have criticized the panel’s efforts, say that the state should cut spending instead of potentially raising taxes that will impact middle class Maine residents.

“We have the time to do this right and it’s imperative that we avoid piling more taxes onto hardworking Mainers who are already paying for the nation’s second most generous welfare system,” Republican House Leader Kenneth Fredette of Newport.

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