June 22, 2018
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Legislators handily approve tax reform ‘what-if’ measure

By Mal Leary, Maine Public

AUGUSTA, Maine — With solid majorities in both the House and Senate, Democrats rolled over GOP opposition to a measure Tuesday changing the effective dates of the Democrats’ tax reform law that voters will consider repealing at referendum June 8.

“There was not an opportunity for the public to weigh in,” said Sen. Richard Rosen, R-Bucksport, the GOP senator on the Appropriations Committee. “We had a good work session on the bill and had a lot of questions answered, but there was no public notice. That is in the control of the majority party.”

Rep. Emily Cain, D-Orono, co-chairman of the committee and sponsor of the bill, said there was not the opportunity for the public to comment, as often happens when bills are considered in the closing days of a session.

“In this short time frame we did not think a public hearing was necessary,” she said. “To me, we tried to keep to the true intent of the bill, which was to address a potential fiscal problem we face this year. “

The House gave the measure all but final approval 91-53, and the Senate followed later in the day with at 21-14 vote for the bill.

Because the tax reform law was scheduled to start collecting new revenue last October, there is an estimated $50 million hole in the state budget if voters decide to keep the tax reform law at referendum in June. The legislation delays all the effective dates of the various provisions for one year.

Attorney General Janet Mills attended the Monday night work session and told the committee her office had worked with Cain to make sure the bill is constitutional. She said the bill is more “administrative” than “substantive,” and because it changes only effective dates and not tax provisions it does not violate the language of the people’s veto provision of the state Constitution or the 1933 opinion of the state supreme court.

Under questioning by GOP members of the committee, Mills did acknowledge changing the effective date of the tax measure could become a substantive issue if, for example, it delayed the effective date for several years.

“This bill is a response to the people’s veto process that suspended the tax measure until the voters decide its fate,” she said.

Cain said she hoped to avoid a sharp partisan clash on the bill, but that is what happened in the Senate.

“I expect the voters of Maine will not reject this kind of tax cut,” said Sen. Joe Perry, D-Bangor. “People are looking for tax cuts, they are looking for lower taxes, they are looking to get rid of the alternative minimum tax.”

The tax reform measure lowers the top personal income tax rate and pays for it by expanding the sales tax to items and services not now taxed. Supporters argue that “exports” part of the tax burden to tourists.

“It’s sad that the people of Maine have lost the $50 million of tax burden reduction this year,” Perry said. “And it’s sad the Maine miracle of cutting [income] taxes by 23 percent while every other state is raising taxes is put off another year, but I see this as the best option we have.”

Sen. David Trahan, R-Waldoboro, led the people’s veto effort that forced the reform legislation to a referendum vote. He said he would support the bill, but only in a special session after voters have decided the tax reform issue.

“There is only a 50-50 chance we will need this,” he said. Trahan said passing the measure now would “appear” to be trying to influence the June vote. He said Perry’s characterization of the tax reform is not that of the thousands of Mainers who signed the petitions to force the issue to a vote.

“I don’t agree with your position that this is just a tax cut, for some it is a tax increase,” he said. “That’s why folks did what they did and went out and got signatures.”

The Appropriations Committee is considering an amendment to the measure that would provide a plan to fund the estimated $600,000 in additional administrative costs it will take to implement the tax package if voters decide it should go forward.

Gov. John Baldacci endorsed the bill when it was introduced, saying it is a “common sense” measure that would avoid the need of an expensive special session of the Legislature.

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