Republicans halt plans to tax nonprofits such as hospitals, private schools

By Christopher Cousins, BDN Staff
Posted June 01, 2013, at 9:09 p.m.

AUGUSTA, Maine — A Republican plan to tax large nonprofits such as private schools, hospitals and advocacy groups won’t be realized immediately, but both Democrats and Republicans say they want to pursue the idea in the future.

A GOP senator also pulled back two of three energy-related proposals that together would have generated $65 million a year in new revenue for the state, and lawmakers had preliminary discussions about giving raises to state workers, though no details were discussed publicly.

The proposal to tax nonprofits, which would have generated an estimated $100 million per year, was significant for the fact that it came from a Republican. Republican Gov. Paul LePage has long said he opposes tax increases, though some argue there are many in his budget proposal.

Sen. Patrick Flood, R-Winthrop, who unveiled the tax on the nonprofits idea Friday during budget deliberations, said Saturday that it’s too big a concept to rush.

“The consensus of the members of the committee I’ve talked with is that it’s an issue whose time has come to discuss,” said Flood. “Unfortunately it probably hasn’t come early enough in this budget cycle for us to discuss now.”

The Appropriations Committee is trying to finish its work on the biennial budget in the next few days so the Legislature can enact it before its June 19 adjournment date.

Flood proposed generating $100 million annually in new tax revenues by implementing a 2 percent tax on large nonprofit organizations’ assets in excess of $250,000. The tax would have affected organizations with gross annual receipts of at least $200,000 and total assets greater than $500,000, including private schools and colleges, hospitals, nonprofit groups and charitable foundations.

Flood and other Republicans said they would write an amendment and introduce it soon that creates a work group to bring the concept back to the Legislature next year.

Rep. Michael Carey, D-Lewiston, said he appreciated Flood’s willingness to slow the process down so nonprofit organizations that would be affected have time to weigh in.

“I think this is a very responsible way to do that,” said Carey.

Sen. Dawn Hill, D-Cape Neddick, congratulated Flood for starting the conversation.

“I think we have to explore all possibilities in the journey we’re on,” said Hill. “Sometimes proposals take courage to bring forward, so Senator Flood, I thank you for that.”

Flood said he’s pulling back two of three energy-related revenue proposals he presented Friday.

In total, the three proposals would have claimed about half of the three energy-related revenue streams for the General Fund, which supports the majority of state government.

Flood said Saturday he will not pursue his proposal to take some of a $30 million federal government grant to remove nuclear waste from the former Maine Yankee nuclear power plant in Wiscasset. He also will not continue with a proposal to claim $23.5 million from systems benefit charges, which are collected from electricity ratepayers to fund conservation programs run by the Efficiency Maine Trust.

Flood said he will continue to pursue reaping General Fund revenues from carbon emissions allowance auctions through the Regional Greenhouse Gas Initiative and would come forward with a more specific proposal in the next couple of days.

On the spending side of the budget, lawmakers appeared to be posturing to unveil a proposal to give raises to state employees who have seen their longevity pay and merit increases frozen for four years. Though they didn’t discuss publicly on Saturday how that would be paid for or how much it will cost, there was wide agreement that frozen state workers’ salaries are not fair to hard-working employees and are making hiring and retention difficult.

CORRECTION:

Because of an editor’s error, an earlier version of this story incorrectly stated that the proposed tax would apply to churches. Under the proposal, religious organizations and public institutions would be exempt from the new tax.

http://bangordailynews.com/2013/06/01/politics/state-house/republicans-halt-plans-to-tax-nonprofits-such-as-hospitals-churches/ printed on November 27, 2014