State of Maine: Budget battles begin

Snow, rain, freeze. Snow, rain, freeze. Basketball. That about sums up this part of the Maine winter. We are all doing the old person shuffle on the streets and sidewalks, and the actual old persons? Staying at home like the survivors they are.

The legislature? Not staying home. Neither rain, nor snow… Well, sometimes snow, but not yet gloom of night. That will come, later in the session. Committees are in full swing now, with something like half of the session’s bills in print.

The biannual budget bill came in at an increase of over 11 percent. But wait — did it? That would be true if you compare biennium to biennium, but just about every two-year budget is amended by “supplemental” budgets that make all kinds of adjustments to original spending levels. If one compares the final expenditures from the previous biennium to Governor Janet Mills’ first budget, as sharp-eyed appropriators recently did, the increase is not so dramatic.

Outside of the budget are legions of spending bills. If passed, they will have to go to the appropriations table for funding. In the meantime, hope springs eternal and we end up with spending requests for adult basic literacy, pedestrian safety, judicial compensation, control of browntail moths, clam research, the LakeSmart program and municipal pest infestations.

In addition to plunking dollars down, there are “tax expenditures,” provisions of the tax code that reduce revenue from taxation. Tax exemptions are a big one. Dozens are proposed in every legislative session. They are popular with the beneficiaries, but for every tax exemption the amount borne by the rest of the taxpayers increases.

So far this year there are proposals to exempt from sales tax small nonprofits, firearm safety devices, feminine hygiene products, sales to parent-teacher organizations, certain meals provided to food service employees, Area Agencies on Aging, nonprofit career and technical student organizations and diapering products.

There are proposals to exempt overtime pay from the income tax and an income tax exemption to “encourage small business hiring.” There are proposals to reduce taxation for disabled veterans and allow a deduction for college savings accounts, an exemption for military pay and for certain student loan repayments. The granddaddy of all income tax reduction bills is one that would, over time, lower the income tax to zero.

There are proposed property tax exemptions as well, for new homeowners and for renewable energy fixtures. There is a proposal to increase the total homestead property tax exemption to $50,000, and to provide enhanced property tax relief for certain veterans.

There is undoubtedly a rationale for all these reductions and exemptions, usually a good one. Some are designed to promote the state economy, some to relieve the struggles of low-income people, and some to assist veterans or the elderly.

The problem lies in the resultant shrinking of the tax base, with fewer and fewer individuals and businesses paying in, driving the need for higher rates. This is not the formula for attracting retirees or businesses to Maine, nor for encouraging Maine’s existing small business to hire more employees.

The need for more tax revenue is reflected in other taxation proposals. Local option taxes have been proposed for ages. This year’s attempt would allow either a seasonal or year-round local tax. Another bill would allow “service center” municipalities to add 1 percent to the sales tax for infrastructure costs. A third would send 25 percent of certain marijuana taxes to the towns from which the revenue was collected.

Finally, there are numerous proposals to restore at least a portion of state-municipal revenue sharing (SMRS), a partnership of more than 40 years through which 5 percent of state income, corporate and sales tax revenues were distributed to municipalities. Unfortunately, funds for the program began to be raided by the legislature in 2008, with the distribution dwindling to just 2 percent over time.

This may have relieved pressure on the state budget, but it increased it in Maine cities and towns. Legislators tut-tutted about municipal belt-tightening but when it comes to penny-pinching, bet on a municipal official over a legislator any day.

We are a long way from the finish line. The time to make a difference is now. Get involved, or don’t complain in June.

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Jill Goldthwait

Jill Goldthwait

Jill Goldthwait worked for 25 years as a registered nurse at Mount Desert Island Hospital. She has served as a Bar Harbor town councilor and as an independent state senator from Hancock County.

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