The sun shines on Maine's Capitol in this spring file photo. Credit: Troy R. Bennett

AUGUSTA, Maine — The Democratic-led Maine Senate took an initial vote on Thursday against a bill that would give cities and towns the option to establish a local tax on meals and lodging, dealing a major blow to an effort backed by some of the state’s largest cities.

Later Thursday, the bill’s sponsor, Rep. Mike Sylvester, D-Portland, tried to save the measure with an amendment that would have the optional local tax only apply to lodging. It passed the House over Republican opposition Thursday night, and the newly amended bill that would simply allow a local-option lodging tax will now go to the Senate.

Sylvester’s bill was one of several similar proposals this year in response to the shorting of state aid to cities and towns by $700 million during the past decade, according to the Maine Municipal Association. It is opposed by an odd coalition of conservatives, moderates and progressives.

The Senate voted 21-14 Thursday against the version of the bill that would have allowed municipalities to apply a local tax to both meals and lodging. Seven Democrats — Assistant Majority Leader Eloise Vitelli of Arrowsic and Sens. Shenna Bellows of Manchester, Cathy Breen of Cumberland, Bill Diamond of Windham, Erin Herbig of Belfast and David Miramant of Camden — voted with all Republicans against it.

That vote came after it narrowly passed in the House on Tuesday in a milestone for proponents of the bill. It faces further action in both chambers, with supporters hoping that removing the meal tax option could reverse Senate opposition and send the bill to Gov. Janet Mills, who has not stated a position on the bill.

Sylvester’s original proposal would have allowed cities and towns to assess a local tax of no more than 1 percent on meals and lodging. Three-quarters of the money would stay in the municipality levying the tax and the rest would go to rural development fund.

The Legislature’s fiscal office expected it to generate $40 million annually if all cities and towns adopted it. Information about how limiting the tax to lodging would affect revenue projections was not available Thursday night.

Such a tax, however, would only be politically palatable in bigger localities. The push for a local-option sales tax was backed by the Maine Municipal Association and service centers led by Portland and Auburn as a way to capture revenue from tourists to offset local costs or as a local-control issue.

Opposition to the idea, however, came from business groups including the Maine State Chamber of Commerce and from across the political spectrum. The conservative Maine Heritage Policy Center and progressive Maine Center for Economic Policy said it would create further taxation and revenue divisions between neighboring cities and towns.

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Michael Shepherd

Michael Shepherd joined the Bangor Daily News in 2015 after three years as a reporter at the Kennebec Journal. A Hallowell native who now lives in Augusta, he graduated from the University of Maine in...