In Augusta, concealed weapons, the minimum wage, bear hunts, legislative term limits, substance abuse and Lyme disease all are having their 15 minutes of fame. As of last weekend, 1,335 bills were in print. In March, and to date in April, more than 100 bills have been sent to the dead file. But the big show is, and always will be, the budget.
The Legislature is well past the date when a budget can pass by a simple majority vote. Two-thirds of legislators will need to support it in order for it to take effect by the July 1 start of the new fiscal year, and that gives all caucuses, and even individual legislators, leverage.
This year, the budget is loaded with changes in tax policy, making it imperative that the Taxation and Appropriations committees work together. However, regardless of the policy preferences of Taxation, it is Appropriations that is responsible for the bottom line. It will be up to that committee to make sure tax revenues are sufficient to cover authorized spending.
Having submitted a tightly entwined package, Governor Paul LePage is not going to let it be picked apart without a fight. He voiced his objections to legislators’ passing on to him bills that promote piecemeal tax breaks or new taxes, vowing to veto them all until his tax reform plan is enacted.
This makes sense. Maine law requires that when an insurance mandate is proposed by the Legislature, a study of its impact on insurance premiums must be undertaken prior to final passage. Perhaps this same system should be applied to bills that increase or lower taxation.
Dozens of new tax breaks are proposed every year – over three dozen so far this session – and those that pass will increase taxes for the rest of us. Shouldn’t we know by how much so we can communicate our opinions to our elected representatives?
As for the governor’s entire tax package, it will be a hard nut for the Legislature to crack. Every legislator can find something to like and something to loathe within the package. To their credit, all the talk so far is of a way forward. No one is bringing out the “s” word (shutdown).
The deal will be done through a host of compromises as the budget is worked. And if the Appropriations Committee is able to achieve unanimity, the budget will go to the floor in a strong position.
There will be plenty of debate, but with a unanimous committee report, the votes will probably be there in the end. Appropriators will repel all proposed amendments, and leadership will work caucus members to be sure of sufficient votes.
Some legislators will cling to their opposition in the final votes. It is a luxury they are afforded when enough of their colleagues act like grown-ups and get a budget passed. They can vote against the budget and tout their unwavering faithfulness to their individual ideals with impunity, knowing they will not get tagged with causing a state government shutdown.
If one wanted a good starting point for revising the governor’s budget and tax proposals, one need look no further than Dick Woodbury. He is a Harvard-educated economist, a visiting scholar with the Federal Reserve Bank of Boston and an economist for the National Bureau of Economic Research. You might say the man knows his stuff.
In addition, he spent six years in the Maine House and four in the Senate as an Independent, both serving on and chairing the Taxation Committee. With a firm grasp of both tax policy and State House politics, his is a helpful voice to those wanting to sort out the current debate in an atmosphere free of partisan contention.
He was one of the prime movers behind a tax reform proposal in 2013 that was the product of a bipartisan legislative working group, a proposal on which at least some of the governor’s current plan is based.
At a recent Bangor Chamber of Commerce meeting, he described the LePage tax reform proposal as a “really workable package.” However, he was quick to acknowledge the realities of getting that package through the Legislature.
The governor’s plan to eliminate municipal revenue sharing and substitute a tax on nonprofits is a non-starter, said Woodbury. Revenue sharing could be adjusted to target it more to areas of high need, but getting rid of it altogether is simply not going to happen. He believes most other aspects of the governor’s proposal could be adjusted to help them win a broader base of support in the Legislature.
Keep the sales taxes higher, retain and double the homestead exemption for everyone, forget the tax on professional services and make a more modest reduction in the corporate tax rate. Work on lowering the income tax, but don’t overreach by putting the focus on eliminating it entirely.
The Woodbury adjustments would retain many of the elements of the administration’s proposal while increasing the overall marketability of the plan. With the clock ticking, the Appropriations Committee should give it a careful review.