AUGUSTA, Maine — Budget writers in the Legislature worked to finalize the details of their bipartisan budget deal Friday while attention shifted to whether the package they crafted can pass the Legislature with enough support to withstand a veto threatened by Gov. Paul LePage.
The Legislature’s Appropriations Committee arrived at a budget accord early Friday morning that, if passed, would raise the state sales, lodging and meals taxes for two years. The budget would use the additional revenue to restore about 65 percent of funding for municipal revenue sharing, which LePage proposed to entirely eliminate in his budget proposal, and most funding for two other property tax relief programs that LePage’s budget also proposed to scale back.
The deal struck early Friday morning would raise the sales tax from 5 percent to 5.5 percent and the meals and lodging taxes from 7 percent to 8 percent. Those rates would revert to the current figures in July 2015.
The budget will require the support of two-thirds of lawmakers in order to take effect at the start of the new fiscal year on July 1.
That threshold of support would also be necessary to override a veto by LePage, which the governor threatened Friday in his weekend radio message. LePage also threatened to veto a state budget crafted by lawmakers two years ago when Republicans controlled both legislative chambers, but he ultimately signed it into law.
“Maine does not have a revenue problem; Maine has a spending problem,” he said. “We spend more on government than we have money to pay for it. We are victimizing the taxpayer to pay for government greed, and we are ignoring our most needy, our disabled and our elderly.”
In the radio message, LePage also said he didn’t intend on allowing state government to shut down on July 1, which would happen if no budget is in place. But he said the responsibility for preventing a shutdown lies with Democratic leaders in the Legislature.
House Speaker Mark Eves on Friday called the Appropriations Committee’s budget deal a responsible, bipartisan way to mitigate the effect of LePage’s budget proposal on cities, towns and property taxpayers.
“It’s clearly not the budget that we would pass on our own,” he said. “It’s not a Democratic budget, and it’s not a Republican budget. It’s a true compromise, bipartisan budget.”
Democratic leaders at the end of May said they favored delaying income tax cuts passed two years ago by a Republican-controlled Legislature as a way to fill the state’s budget hole. Democrats took that proposal off the table during budget negotiations earlier this week and, ultimately, the Republican committee members supported temporary sales, meals and lodging tax hikes.
“Where we started with this budget was recognizing why we were here, and that was the unfunded tax cuts that were pushed by the governor the last time,” said Eves, D-North Berwick. “When you have divided government, you have to compromise and this is what that compromise looks like.”
While Democrats are likely to back the budget deal, it’s less likely to go over well with Republican lawmakers, who hold minorities in the House and Senate. Some Republican support would be needed, however, to override a LePage veto. That hasn’t happened yet this session, as Republicans have helped sustain 11 vetoes.
“We were so close to making some structural changes that were desperately needed within state government and, unfortunately, we’re going to ask for folks to make the change in their own home budgets in order to fund state government,” said Senate Republican Leader Michael Thibodeau of Winterport.
“We had a real opportunity here to maybe end some programs that are nonessential functions of state government, and we didn’t have the political will as a body to do that,” he added, citing funding for the state’s clean elections program and energy efficiency programs as examples.
The budget deal would restore at least some of the municipal revenue sharing funds that were entirely at risk in LePage’s budget proposal. But the reduced funding level still has municipalities taking a hit.
“We were discouraged in the last few years when there have been raids of revenue sharing,” said Kate Dufour, senior legislative advocate at the Maine Municipal Association. “It’s now a common occurrence, and that is incredibly discouraging.”
Lawmakers said the tax increases included in their budget proposal would raise $178 million for state coffers, allowing them to restore $125 million of the $200 million in revenue sharing funds LePage proposed to suspend.
Appropriations Committee members also opted to reverse LePage’s proposed cut of the homestead exemption program and replace the circuit breaker program with a “property tax fairness” exemption that will kick in automatically when residents file their state taxes. Other programs for which funding was restored by the committee include the low-cost Drugs for the Elderly program; general assistance; Head Start; Women, Work and Community; and other job training programs.
The committee also approved spending more on public education to bring funding to the level it was in the current biennium before LePage cut $12.6 million in school aid as part of a larger spending curtailment. The additional education funding will come in part from using $13 million in casino revenue for general purpose aid to education.
In addition, the budget deal includes nearly $9 million to restore merit and longevity pay for state employees who haven’t seen a pay bump in more than four years.
That provision of the budget has the support of Rep. Matt Pouliot, R-Augusta. “I have a lot of state employees in my district,” he said. “The merit and longevity pay increases are important to me.”
As for the rest of the package, Pouliot said, “The budget’s a compromise. In the end, we need to find common ground, and I think the Appropriations Committee has done a good job of that.”
BDN reporter Christopher Cousins contributed to this story.