After initial passage in House and Senate, stage set for final votes on revenue sharing next week

Posted Feb. 11, 2014, at 10:10 a.m.
Last modified Feb. 11, 2014, at 3:56 p.m.

AUGUSTA, Maine — Lawmakers in both the House and Senate on Tuesday voted again to support a bill that would restore $40 million in state aid to municipalities next year, setting the stage for what will likely be final votes in both chambers next week.

The vote in the House took place without debate or roll call, and sent the bill to the Senate, which immediately debated the bill for the first time before voting 33-2 to approve it.

The bill, LD 1762, would restore $40 million in municipal revenue sharing with $21 million from the state’s Budget Stabilization Fund, commonly known as the rainy day fund; $4 million from a fund designed to accumulate budget surplus with the goal of reducing state income taxes; and $15 million from unappropriated new revenue predicted in recent state economic forecasts.

Despite their opposition to its funding mechanism, GOP lawmakers voted overwhelmingly to join Democrats in supporting the bill. Sen. Gary Plummer, R-Windham, summarized those Republicans’ position in a brief floor speech, saying his back was against the wall.

“I surrender, you win. I run up the white flag,” he said. “If I want to support revenue sharing, I have no choice but to support this bill.”

Democrats in the House on Tuesday fended off six amendments to the bill, seeing the original, unamended proposal from the budget-writing Appropriations Committee as the surest way to secure the GOP support necessary to override a potential veto by Republican Gov. Paul LePage.

Five Republican floor amendments were killed by Democrats with little debate. They included proposals seeking to protect the savings accounts and replace the funding through other means more amenable to Republicans, including a proposal by Rep. Lawrence Lockman, R-Amherst, that would have paid for revenue sharing by eliminating state funding for general assistance and MaineCare funding for methadone treatments, podiatry and screening for sexually transmitted diseases.

An amendment from Rep. Peter Stuckey, D-Portland, which would have paid for the revenue sharing with cuts to tax breaks for businesses and increased income tax on income over $289,000, was also killed.

In the Senate, majority Democrats fended off an amendment by Assistant Minority Leader Roger Katz, R-Augusta with a party-line vote. Katz’s amendment would have guaranteed the restoration of revenue sharing, but gave the Legislature more time to decide exactly how to do it.

The current biennial budget included a $40 million cut to revenue sharing in 2015 if the Legislature could not find a way to fill the gap. The budget already reduced revenue sharing by more than $30 million, from about $96 million in 2013 to about $65 million the first year of the two-year budget that started July 1, 2013; if the $40 million hole isn’t filled, the total amount of state aid to cities and towns will fall to about $20 million in the second year.

That would represent a nearly 80 percent decline in state aid to municipalities in just two years. In January, dozens of municipal officials testified for hours that they could not absorb further state aid cuts without slashing core services such as police and fire departments, raising property taxes or both.

As their counterparts in the House did last week, Democrats in the Senate framed the bill as fulfillment of a promise to municipalities, which need the assurance of the Legislature in order to craft next year’s budgets. Meanwhile, some Republicans said that lawmakers should focus on the roughly $57 million budget shortfall that exists this year before turning their attention to next year’s revenue-sharing shortfall. The budget gives lawmakers until the end of this session to find the $40 million.

Sen. John Cleveland, D-Auburn, a former mayor in Auburn, said senators needed to act immediately on the proposal before them, rather than waiting for some other proposal.

“I haven’t heard any other realistic choices that in the next two weeks could possibly be a different option than what we have,” he said. “My city, Auburn, is going to lose $1 million if we don’t do this. That’s a lot of money in a community that’s already cut services to the bone.”

Sen. Patrick Flood of Winthrop, the only GOP senator on Appropriations, was joined only by Sen. Richard Woodbury, an independent from Yarmouth, in opposing the bill. Flood said it was “untimely and unnecessary” to take action on revenue sharing now.

“As an appropriator, it’s my duty to guide you cautiously on fiscal matters, and to do that with the best possible data,” he said. “On Feb. 22, we’ll have a new revenue forecast. … It is unclear to me why we would wish to rush this very important decision of using $40 million for one particular and very important use based on relatively old revenue information when on Feb. 22 we’ll have newer, better information.”

Last week, House Republicans argued fiercely against the bill during hours of debate, and used several procedural motions in attempts to delay a vote. In the end, though, roughly 30 members of the GOP broke from party leaders and LePage — who say the bill is fiscally irresponsible and out of order — and voted with Democrats to approve the measure, 114-21.

Finance Commissioner Sawin Millett has said the proposed reduction of the rainy day fund will result in a downgraded bond rating for the state. But the Senate chairwoman of the Appropriations Committee, Dawn Hill of Cape Neddick, said Tuesday that Moody’s and S&P had both assured the committee that Maine’s bond rating would not be lowered based on any one decision.

LePage opposes the bill and has said recently that he will not release up to $100 million in transportation infrastructure bonds if the Legislature passes LD 1762. LePage’s office said Monday that a veto was “likely,” though no decision will be made until a bill hits his desk.

Follow Mario Moretto on Twitter at @riocarmine.

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