Maine lawmakers still face ‘really tough choices’ on how to solve $880 million budget shortfall

The State House in Augusta, as seen Monday, March 11, 2013.
Troy R. Bennett | BDN
The State House in Augusta, as seen Monday, March 11, 2013. Buy Photo
By Scott Thistle, Sun Journal
Posted March 29, 2013, at 11:23 a.m.

AUGUSTA, Maine — With fewer than 100 days left in the state’s fiscal year and a June 30 deadline for a balanced budget looming, Maine lawmakers are far from agreement on how they will settle an $880 million budget gap.

Many expect the debate on the state’s $6.3 billion budget and how to fix that 14 percent shortfall to drag well into June.

Others say a bipartisan deal that two-thirds of the Legislature can agree on will be worked out in time to avoid a government shutdown.

House Minority Leader Ken Fredette, R-Newport, said he is learning new ways to say “government shutdown” as he is roundly criticized — largely by Democrats — for suggesting that a budget impasse could occur.

Off the record, some Democrats agree that a shutdown is not beyond the realm of possibilities.

The last time state lawmakers failed at a budget and state government closed its doors temporarily was in 1991.

A pair of tax-relief bills, both of which were left on the table in the Maine House of Representatives on Thursday, help illuminate just how far apart Democrats and Republicans are when it comes to the “t” word — taxes.

One of the bills, offered by Democrats, would increase the earned-income tax credit for low- and middle-income wage earners. The other, offered by Republicans, would lower the state’s capital gains tax by about $40 million. But neither bill would address the projected budget shortfall. In fact, if passed, they would increase the revenue shortage.

“There’s no doubt in my mind that we will have to do revenue-raising,” said state Sen. Margaret Craven, D-Lewiston. Craven said she would consider a variety of tax increases, including temporarily increasing the state’s sales tax or temporarily freezing income tax cuts that were enacted in 2012.

Other tax changes could include increasing sales taxes on cigarettes or expanding the tax on tobacco to include small cigars and smokeless products. Those proposals would raise an estimated $50 million, Craven said.

One or a combination of those increases would be a “better bargain,” Craven said, than the budget offered by Republican Gov. Paul LePage, which partially fills the shortfall by eliminating about $250 million of state revenue-sharing to cities and towns.

It’s a provision that both Republicans and Democrats say they have a hard time swallowing as selectmen, mayors and city councilors back home are saying the reductions would devastate municipal budgets or force property taxes upward.

Craven said her income tax break adds up to $19.95, but proposed reductions in state funding or revenue-sharing for public schools and local municipalities means her property taxes would jump by more than $500.

“It isn’t working; it’s silly, really,” Craven said.

But conservatives will say what’s silly is that the state continues to spend beyond its means.

“The reality is at the end of the [Gov. John] Baldacci administration, the same problem existed,” said Sen. Michael Thibodeau, R-Winterport. “We had a government that had grown to the point that we couldn’t afford to fund it.”

Lawmakers used one-time federal stimulus funds to solve that budget shortfall, but the underlying structure is still a government that cost more to run than it collects in revenue, Thibodeau said.

“We are still faced with the same really tough choices about where we can reduce the size of our government,” he said.

Thibodeau and other leaders in the minority said Thursday they were concerned about the pace of action on the budget and the substance of other bills Democrats have advanced.

“Generally, Republicans are not happy with the priority of the Democrats, the petty bills,” said David Sorensen, spokesman for House Republicans. “And we are waiting for them to present their alternative on the governor’s budget — the biggest issue of the entire session — and they have not presented a single solution.”

Bills to sell the governor’s mansion, to revoke his pension and to prohibit teenagers from using tanning booths are among the measures Sorensen lists as “petty.”

His counterpart, Jodi Quintero, the communications director for House Democrats, said a bill to protect teens from cancer isn’t petty.

Quintero said the pace of progress on the budget is on track and matches nearly identically the pace Republicans took when they held the majority two years ago. She said talk of a government shutdown is overblown rhetoric and unproductive.

“We are working together; the committees are doing bipartisan work every day,” Quintero said. “We are still in public hearing.” Quintero said many ideas on solving the budget gap are moving around, but they won’t advance until the public hearings on the governor’s proposed budget are done.

“You never close the budget before the public hearings are done,” Quintero said.

She said that while the bulk of the Legislature will take a break in mid-April, the Appropriations Committee will continue its work.

Senate President Justin Alfond, D-Portland, said both parties and even the few independent lawmakers in the Legislature are offering bills that look at raising new revenues. Alfond said most of those bills will be heard soon and would be clumped together so the public could follow along.

Even LePage’s budget proposal, which eliminates indexing on the income tax, raises new revenue, legislative leaders are quick to point out.

House Majority Leader Seth Berry, D-Bowdoinham, is sponsoring a bill he calls the “Buffett Rule” — named for billionaire Warren Buffett, who has suggested the most wealthy should be taxed more.

Berry said the measure requires those earning $250,000 or more to pay at least what the middle class pays in state and local taxes. The measure would raise an estimated $200 million, according to Democrats.

Berry’s bill, which hasn’t been scheduled for a public hearing — legislative leaders said they expect it to be heard sometime in mid April.

At least one Republican also has a bill that would increase income taxes for those earning more than $250,000. Sen. Tom Saviello, R-Wilton, said his bill would raise $5 million and would affect about 4,100 taxpayers in Maine.

Saviello said the bill, which is sponsored in the House by Rep. Terry Hayes, D-Buckfield, is the result of conversations with constituents in his district.

“If you look at a lot of the bills that I sponsored this year, they are a real reflection of what people talk to me about and this is one,” Saviello said. “I felt to be true to myself and what I do here, I need to do that. I’ve taken a little bit of grief, but it doesn’t matter. That’s who elected me.”

Rep. Gary Knight, R-Livermore Falls, the lead Republican on the Legislature’s Taxation Committee, said the committee has been able to quash bills that cost the state money. He said he liked several of those bills, including one that would have provided tax credits to performing arts organizations.

“It was a good bill,” Knight said. “We are not questioning the integrity or the credibility of these bills. The problem is we don’t have the money to be having additional tax expenditures.”

Knight said bills that increase taxes or raise revenue have been few and far between. “They’re out there; they’re coming,” he said.

http://bangordailynews.com/2013/03/29/politics/maine-lawmakers-still-face-really-tough-choices-on-how-to-solve-880-million-budget-shortfall/ printed on July 25, 2014