AUGUSTA, Maine — Lawmakers on the Appropriations Committee are working behind closed doors to make drastic changes to Gov. Paul LePage’s biennial budget proposal with negotiations focused on big-ticket items such as giving state employees raises and easing a proposed suspension of municipal revenue sharing.
Lawmakers have broached these subjects in public, but details of what the initiatives would cost and how they would be paid for so far have not been shared.
Sen. Dawn Hill, D-York, who is co-chairwoman of the budget-writing panel, said some of the sources of new revenue under discussion include new taxes on tobacco products, repealing income tax cuts for high earners that went into effect this year, a temporary increase of the state’s 5 percent sales tax and an increase on meals and lodging taxes.
While support for raising taxes is concentrated in the Democratic party, Hill said there is ample evidence that Republicans are supportive of some tax increases, too. On Friday, Sen. Patrick Flood, R-Winthrop, proposed taxing large nonprofit organizations in hopes of raising $100 million a year. Flood pulled the idea back Saturday, though legislators from both parties said they are interested in pursuing it outside the budget process, possibly by bringing it back next year.
“It’s something we need to look into,” said Hill. “While we took that off as a source of revenue right now, it shows that both parties are interested in raising revenues.”
LePage has said repeatedly that he won’t support any new taxes, but Hill said his budget proposal — including a change package offered last month — includes numerous tax increases that total more than $165 million over the next two years. They include new taxes on newspapers and periodicals ($6.1 million); hospital operating budgets ($11.8 million, which is supplemented by a 62 percent federal match); a suspension of income tax indexing ($9.1 million); cuts to itemized income tax deductions ($65 million); and reductions in the circuit breaker property tax relief program for landowners and renters ($73.4 million).
“If you vote for this budget, you’re voting for tax increases,” said Hill.
Amid Appropriations Committee discussions about new revenue, there are also proposals in the wings for more spending. In addition to searching for ways to fund at least part of the roughly $200 million in municipal revenue sharing LePage proposed to cut from the state budget, lawmakers have talked about restoring merit pay increases and longevity pay for unionized state workers who haven’t had a raise in more than four years. The topic led to a spirited discussion among Appropriations Committee members Saturday night, which was led off by Sen. Emily Cain, D-Orono. Cain said that the issue is hindering efforts to hire quality employees and then retain them.
“This is a serious challenge facing the state from a business perspective and a workforce perspective,” said Cain.
Rep. Erik Jorgensen, D-Portland, echoed those comments.
“We’ve heard about front-line departments who are understaffed. We heard about people being hired and being paid the same as people who have been here for several years,” said Jorgensen. “Five years [without a raise] is a long time and I just don’t think it’s appropriate to go further without doing something.”
Several Republicans on the committee agreed that state workers deserve more, but said the state’s financial woes make it impossible. Some of them blamed what they called out-of-control increases in Department of Health and Human Services spending. Democrats shot back that increasing DHHS spending is a small part of the reason for this year’s budget situation. Instead, they blamed tax cuts passed by the previous GOP-led Legislature and enacted this year.
“We can’t look backward,” said Rep. Dennis Keschl, R-Belgrade, of state employees. “What the state employees have lost, they’ve lost. They’re not going to gain it back because we cannot give it to them right now. We don’t have the money.”
Ginette Rivard, president of the Maine State Employees Association, SEIU Local 1989, which represents the majority of state workers, said Saturday’s discussion on the committee was heartening, as was a letter signed by all members of the State and Local Government Committee urging action on merit and longevity pay.
“It has been almost five years that these workers have had their merit and longevity pay frozen,” wrote the lawmakers in the May 23 letter. “We are losing valuable, talented employees to the private sector by not meeting our contractual obligations for merit and longevity pay.”
Rivard, in a prepared statement, urged lawmakers to restore longevity and merit pay and increase funding for the State Employee Health Plan.
“Those actions will help address the serious public employee recruitment and retention problem that the state of Maine is experiencing,” said Rivard. “Those actions will also go a long way toward recognizing the hard work that state of Maine employees are doing for all Maine people.”
Rep. Peggy Rotundo, D-Lewiston, the Appropriations Committee’s House chairwoman, said the committee is also in intense budget negotiations about education funding and prescription drugs for the elderly. Because negotiations are ongoing, Rotundo declined to discuss details.
Flood and others said it’s crucial for the committee to arrive at a unanimous budget recommendation because the budget bill will require a two-thirds vote of the Legislature and could face a veto by LePage.
“We know the only bill that’s going to be a success is a unanimous bill,” Flood said Monday. “Despite the fact we’re not in complete alignment yet, that’s our commitment.”
Hill said she expects the Appropriations Committee to finish its work by Thursday in order for the budget bill to have time to go through the Legislature before July 1, when the new budget takes effect.