AUGUSTA, Maine — Legislative budget negotiators indicated Friday night they would not accept Gov. Paul LePage’s plan to increase the state’s sales tax.
The 13 members of the Appropriations Committee, who plan to meet throughout the weekend, voted unanimously not to include LePage’s proposal in the upcoming two-year budget. The vote is nonbinding, but it’s a strong indication that sales tax changes as proposed by the governor are dead.
Lawmakers in 2013 enacted a temporary increase in the sales tax, raising the rate from 5 percent to 5.5 percent, with a sunset of July 2015, at which time the rate would revert to the lower level.
LePage’s plan would have raised the sales tax to 6.5 percent and expanded the categories of goods and services taxed as part of a comprehensive tax reform effort.
The increase in revenue from the tax changes would have helped pay off LePage’s huge proposed cuts to the income tax, an effort the governor described as a first step in “modernizing the sales tax” and moving Maine toward a consumption-based tax system.
Legislative Republicans, many of whom have campaigned on an anti-tax platform, support income tax cuts but bristled at the idea of increasing the sales tax.
The tax reform counterproposal recently offered by Republican legislative leaders in the Legislature would maintain the current sales tax rate of 5.5 percent instead of allowing it to revert to 5 percent at the end of June. That more modest proposal still is on the table, Rep. Jeffrey Timberlake, R-Turner, a committee member and one of the plan’s authors, said Saturday morning.
The committee also voted Friday night on several other portions of LePage’s budget plan, as they continue to mold the budget into one of their own design. The votes are preliminary in nature and subject to change, but they offer the best insight available into where the state’s two-year spending plan is headed.
Here’s a quick rundown of some of the votes:
— A unanimous vote to reject a provision by LePage to eliminate the Homestead Property Tax Exemption for homeowners under 65 years old.
— A unanimous vote to reject the governor’s proposal to eliminate state aid for municipalities in fiscal year 2017. The committee voted to maintain the Municipal Revenue Sharing program’s current spending level for both years of the budget.
— A unanimous vote against proposed cuts to the Medicaid Savings Plan and Drugs for the Elderly program, while voting unanimously to support a new asset test for those programs.
— A unanimous vote to support maintaining all current tax expenditures, which mostly represent tax breaks designed to encourage business growth and development.
— A unanimous vote to support a provision to ensure salary parity between Department of Corrections employees and county jail employees who do the same kind of job. (Department of Corrections officials have said higher pay at county jails has decimated the agency’s ability to hire and retain workers.)
Budget negotiators are down to the wire, having blown past two self-imposed deadlines to finish a spending plan and submit it for approval in the House and Senate. If no spending plan is in place by midnight June 30, the current budget will lapse and nonessential services of state government will shut down.
The Appropriations Committee plans to the State House for more negotiations and votes Saturday morning.
Watch bangordailynews.com for updates.
Follow Mario Moretto on Twitter at @riocarmine.