AUGUSTA, Maine — The word of the day in the State House on Friday was “bold” as Gov. Paul LePage presented a biennial budget bill that surprised Democrats for its compassion and appeared to create concern among Republicans because of a range of tax increases it proposes.
In the immediate aftermath of its release, virtually no one — including lawmakers, reporters and lobbyists — had a firm grasp on the details of the budget document, which spans hundreds of pages and is posted on the Maine Bureau of the Budget’s website. That means most reactions after LePage’s tightly controlled release of the two-year budget were based on what the administration chose to highlight during afternoon briefings on Friday.
LePage and his Cabinet members stressed that a tax reform proposal contained in the budget — which would lower income taxes while drastically increasing sales and service tax revenue by stripping away longstanding exemptions — would result in an overall reduction in the tax burden for Mainers.
Initial reactions from Republicans were tepid, though they universally lauded LePage for being bold. Senate President Mike Thibodeau, R-Winterport, said most Republicans will reserve judgment until they can digest the overall package.
“Everybody wants to understand clearly what’s being proposed,” said Thibodeau. “We’ve got to look at it globally. Hooray for the governor for tackling the high income tax rate that exists in the state of Maine. We need to do something about that. If we can get that lowered, it helps to make Maine more competitive.”
House Speaker Mark Eves, D-North Berwick, said he expects some Republicans and Democrats to revolt over specific proposed tax increases, just as they have in past years when the Legislature or a citizen initiative has attempted tax reform. All of those efforts failed.
“I would be really interested to know what the House and Senate Republican caucus members think of it because it is certainly a 180 from the position of no new taxes, ever,” said Eves. “Now we’re talking about broadening and increasing taxes. … I never thought I would see it.”
Eves said there were clearly things in the proposal that Democrats will balk at, including a proposal to eliminate Maine’s mortgage interest tax deduction and also what appeared to be a $45 million reduction in a program that helps provide low-cost prescription drugs to the elderly.
“But again we need to look at this in the big context,” Eves said. “What is the net effect? How does this grow jobs in our state? If it does then we certainly will be supportive of it.”
Curtis Picard, executive director of the Retail Association of Maine, said Friday evening that although he had not seen the entire tax reform proposal, there were elements that could cause concern among his organization’s members. He said he was concerned about the cost merchants would bear to start collecting new taxes, despite the fact that LePage’s proposal includes funding for that.
“For years, retailers have been the unpaid tax collectors in the state of Maine,” said Picard. “If the sales tax is going to be expanded, there’s going to be a cost.”
Picard said he also was worried about raising the sales tax to 6.5 percent, especially given that New Hampshire has no sales tax. This is of particular concern for big-ticket items.
“At 6.5 percent, that is a really big bite,” he said. “Is that enough to drive someone to New Hampshire? That’s the perennial problem.”
Assistant Senate Majority Leader Andre Cushing, R-Hampden, said he saw LePage’s tax proposals as daring but supportive of his overall goal of improving Maine’s economy.
“He’s exhibiting the same leadership he has on so many other issues in the past,” said Cushing. “We’re on the first step of this journey. We need to make sure we have careful consideration of everything.”
Senate Majority Leader Garrett Mason, R-Lisbon, said LePage “is definitely interested in making sure Mainers have more money in their pockets.”
“We all know that this is the beginning of a long process,” he said.
Assistant House Minority Leader Ellie Espling, R-New Gloucester, agreed.
“I need to see the details,” she said. “We have months to discuss it.”
Education
LePage proposes to essentially flat-fund K-12 public schools because he has not been satisfied with efforts at the local level to create efficiencies. To that end, he proposes spending $10 million over the biennium for a competitive grant program to help schools consolidate services and reduce spending. He also proposes funding charter schools within the state’s Essential Programs and Services formula — as opposed to the process of siphoning money away from each charter school student’s former school district.
Connie Brown, executive director of the Maine School Management Association, said that in addition to spreading the cost of charter schools across the state to minimize an effect on any one school district, the budget proposal includes new money for charter schools.
“This is welcome news,” said Brown. “We certainly want to work with the governor on this.”
In a development that has little to do with the budget, LePage said he is asking for the resignation of Maine Community College President John Fitzsimmons. LePage said he made that statement because Fitzsimmons has not acted on some of his requests, such as continuing a bridge-year program and implementing credit transferability between community colleges and the university system.
“He’s been in a bunker, and I can’t find him,” said LePage. “I’ve asked for a few things, and I have gotten nothing.”
Fitzsimmons could not be reached Friday evening, but Eves defended him.
“I think President Fitzsimmons has done a good job at the community college system and we’ve partnered with him many times,” said Eves after being told about LePage’s statement.
Fitzsimmons was appointed president of the system in 2011.
Far from a done deal
The Legislature will begin an arduous process of sifting through the budget document — which spans more than 1,000 pages — in the coming weeks. If a biennial budget bill isn’t enacted by June 30, it could result in a state government shutdown.
LePage, who ended up vetoing the previous biennial budget after the Legislature revised it, would not say whether there were provisions within his proposal that he considers sacred.
“I’m not negotiating today, boys,” said LePage in response to a reporter’s question.
Scott Thistle, state politics editor for the Sun Journal, contributed to this report.
