‘Gang of 11’ lawmakers prepare to unveil tax reform, budget plan

Posted April 30, 2013, at 11:19 a.m.
Last modified April 30, 2013, at 6:34 p.m.

AUGUSTA, Maine — A bipartisan group of legislators who have been working quietly behind the scenes is set to unveil a tax reform package Wednesday that they hope will stabilize revenues for the state while providing relief to income and property taxpayers.

Senate President Justin Alfond, D-Portland, said the package goes a long way toward answering Gov. Paul LePage’s call for legislators — particularly Democrats — to come up with solutions if they don’t like elements of his biennial budget proposal. Among the more hotly contested concepts in the budget bill is a proposal to suspend an estimated $200 million in municipal revenue sharing, reduce property tax exemption programs, flat-fund subsidies for public schools and pass half the cost of teacher retirements from the state to the local level.

A spokeswoman for LePage said Tuesday morning that the governor has not been involved in developing the legislation and is awaiting the final version before deciding whether he will support it.

“We can’t comment until it’s publicly released,” LePage spokeswoman Adrienne Bennett said. “The details could have changed from one day to the next.”

Members of the so-called Gang of Eleven legislators, which includes five Democrats, five Republicans and an independent, were reluctant to discuss the details of the package Tuesday, though they said the bipartisan membership of the group could give the reform package a fighting chance. Various tax reform packages have found the support of one party or the other in recent years but have failed to win passage in the full Legislature.

Sen. Richard Woodbury, I-Yarmouth, who is an economist, is spearheading the effort. He said Tuesday that one difference between this package and previous ones is that it is broader in scope.

“This is a much bigger reform,” he said. “This is a fundamental change in the way we finance government.”

Senate Majority Leader Seth Goodall, D-Richmond, agreed that the package is far-reaching.

“This takes in our entire tax code,” he said. “In the past we haven’t looked at reforming the entire tax code, including property taxes. I’ve done a lot of reflection on why this hasn’t succeeded in the past. The consistent message is that this has to be bipartisan.”

Sen. Emily Cain, D-Orono, is among the group of 11 lawmakers involved in shaping the tax reform bill. Cain, one of two members of the budget-writing Appropriations Committee to sign onto the effort, said Maine is long overdue for an overhaul of its tax system. Republican Rep. Dennis Keschl of Belgrade is the other Appropriations Committee member working on the tax reform package.

“This is really about modernizing and simplifying the tax code,” she said. “We want to reduce income and property tax burdens on Maine residents to try to relieve some of the pressure on household budgets and really focus on a pro-growth approach to economic development.”

It’s also about ensuring a more stable source of revenues for the state so Maine’s tax collections aren’t as sensitive to economic swings.

“A key element for us is not to have a short-term, Band-Aid approach,” Cain said. “The governor’s budget is full of challenges, and it really has inspired a much bigger conversation around the tax code in Maine.”

Alfond said Monday that he expects the reforms to result in more revenue for the state that could be used to offset some elements of LePage’s budget proposal. He said it also shows that on some goals, Republicans and Democrats aren’t so far apart.

“This is an example of Republicans, Democrats and an independent coming together to fix a pressing issue, which is the state’s tax code,” said Alfond. “If you don’t foster that environment, this doesn’t happen.”

Cain said the package has elements that members of either party wouldn’t favor on their own.

“This package is a balance,” she said. “There are many things in there that, on their own, Democrats or Republicans would object to, but in the context of this balanced and thoughtful approach, there’s give and take on both sides.”

Woodbury told the Bangor Daily News last week that part of the plan is to raise taxes typically paid by out-of-state visitors or part-time residents in order to relieve the burden on year-round Mainers.

Bennett said any tax increases could be problematic for LePage.

“It’s no secret that the governor is not a proponent of tax hikes,” she said. “He proposed a balanced budget and now it’s the Legislature’s responsibility to come up with alternatives if what he proposed is not acceptable to them. It’s interesting that Democratic leadership has not come forward with any sort of plan yet, but we’ll have to wait and see. It’s budget season. We’ll see if this is the only solution that comes forward.”

But Goodall said the governor, lawmakers and Maine people should consider the measure in totality.

“This is not a solution to the budget. It’s part of the solution,” he said. “I’m urging people to judge it on its merits in its entirety.”

Some policy underpinning in the forthcoming package, which will be titled An Act to Modernize and Simplify the Tax Code, might resemble a tax reform package passed by majority Democrats in 2009 and overturned the next year in a Republican-led people’s veto campaign. That’s according to a summary of the tax reform package that was provided Tuesday to the Bangor Daily News, although several members of the Gang of 11 said that document was outdated and inaccurate.

The 2009 reform package lowered the top income tax rate to 6.5 percent from 8.5 percent and applied the sales tax to a broader range of goods and services, from haircuts to auto repairs. After a petition drive led in part by Republican lawmakers triggered a referendum, Maine voters repealed the 2009 package.

Cain said this year’s tax reform effort won’t be a repeat from 2009 because, from the start, the intent has been to craft a package with support from both parties.

“We are so often these days put in a place where it’s a Democratic plan or a Republican plan,” she said. “This is not about that. This is about the best ideas and bringing them together in a way that’s bipartisan.”

Other members of the Gang of Eleven are Assistant Senate Republican Leader Roger Katz of Augusta, Rep. Gary Knight, R-Livermore, Rep. Mark Dion, D-Portland, Rep. Amy Volk, R-Scarborough, Rep. Lance Harvell, R-Farmington, Rep. Nate Libby, D-Lewiston, and Rep. Sara Gideon, D-Freeport.

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