AUGUSTA, Maine — Gov. Paul LePage continued what has been an impassioned and articulate defense of his sweeping tax reform proposal Tuesday during his State of the State address, solidifying the notion that cutting taxes is how he hopes to define his second-term legacy.
If he pulls it off — which is far from certain — his legacy will be thus defined, though his opponents say his proposals will be disastrous for Maine.
As the Legislature continues to gather speed in its opening weeks, LePage’s full-throated promotion of his tax reform scheme — first, in general terms at his inaugural speech, then in more specific terms in a range of small public appearances since then, and last week in a statewide radio broadcast — is piling up on lawmakers who are still months away from casting votes on his budget bill.
That is probably why LePage spent the majority of his speech Tuesday evening on tax reform before cruising through a staccato list of other goals past and present toward the end.
What LePage said
— “I would like to make a very important announcement: I am the only Republican governor not running for president — yet.” OK, governor, on to the serious:
— LePage continued to tout the virtues of moving Maine to a consumption-based economy where more taxes are paid when Mainers and visitors to the state make purchases as opposed to having a bite taken out of their weekly paychecks. That’s why LePage wants to reduce the income tax for corporations and individuals and partially make up for it by expanding the sales tax base and raising the sales tax rate.
— Towns and cities that are fretting about LePage’s proposal to reduce municipal revenue sharing in the first year and eliminate it entirely in the second year of his two-year budget. Municipal leaders say that would leave cities and towns scrambling to compensate for approximately $250 million less in state aid over the two years and push more education costs to the local level (estimated in the tens of millions of dollars annually. LePage also proposes giving municipalities telecommunications excise tax revenues ($16.5 million in the next two years) and allowing them to tax large nonprofit organizations (the revenues from which have proven difficult to estimate). The numbers don’t balance out, causing LePage’s opponents to claim that sharp increases in property taxes will be the only way to make up the difference.
— This budget bill is just the beginning of LePage’s quest to eliminate Maine’s income tax. “I want prosperity, not poverty, for all Mainers, even my adversaries,” he said.
— LePage returned to many of the proposals and accomplishments he’s talked about for four years: Tax cuts or credits that benefit military families and older Mainers; welfare reform; increasing funding for nursing homes; tougher rules for drug addicts; harvesting of timber on state lands to support home energy projects; restrictions on state benefits for undocumented immigrants; fighting Maine’s drug epidemic with more detectives, prosecutors and judges; increasing the use of natural gas and hydropower; and fighting domestic violence.
— He called for bipartisanship in Augusta: “I want prosperity for all Mainers. We must work together to make it happen.”
What LePage didn’t say
— While LePage spent a lot of time discussing the benefits of his tax reform proposal, he avoided the other side of the equation: How state government will adjust to the loss of the nearly $300 million by 2019, a cut that is the foundation of his plan. That number pales in comparison to the impact on the state budget if the income tax rate is reduced to zero, which is his ultimate goal.
— There was no mention at all of education, which LePage came into office in 2010 touting as one of his three priorities (along with creating jobs and lowering energy costs). That could be because while he is proposing to essentially flat-fund K-12 education, LePage proposes to force municipalities to raise more from local property taxes in order to earn full subsidies from the state. Another reason he might have avoided education is because he triggered controversy earlier this month when he caused the resignation of Maine Community College System President John Fitzsimmons. The omission of education was curious, however, given that LePage is proposing the creation of a $10 million competitive grant program for schools to consolidate operations and save money, which is at the core of his argument that his tax cuts can be balanced by finding new efficiencies in government. Then again, LePage didn’t discuss education in last year’s State of the State, either.
— There was almost no mention of health care, Medicaid expansion or the federal Affordable Care Act. Just this week, Maine filed an amicus brief in a U.S. Supreme Court case that could determine if residents of states like Maine, which declined to set up its own health insurance marketplaces, will be eligible for Obamacare subsidies.
— There was no reference to LePage’s proposal to drastically change how Maine’s treasurer, attorney general and secretary of state are appointed, the latter of which would be replaced by a lieutenant governor.
What lawmakers said
— Senate President Mike Thibodeau, R-Winterport: “I’m really encouraged. I think we’re going to work very well together. [Democratic House Speaker] Mark Eves and I have a great relationship and are making great strides toward working together. I think we’re going to surprise many people.”
— Speaker Eves, of North Berwick: “We’re glad to hear the governor is open to sitting down and working with us.”
— House Minority Leader Ken Fredette, R-Newport: “Obviously the budget proposal is a central piece of [LePage’s] agenda over the next two years. … Obviously we’ve had an election and you’ve seen a change in his tone since the election.”
— Senate Minority Leader Justin Alfond, D-Portland: “I thought his tone was great tonight. … He’s starting on the right foot and [Democrats] are willing partners. We know we need to work with him and Republicans to get things done.”
— Assistant House Minority Leader Ellie Espling, R-New Gloucester: “He’s confident that the state is moving in the right direction. For him to lay out his proposals and plans was the right thing to do tonight.”
— Alfond: “The governor continues to tell us just half the story. What he’s not talking to Mainers about is what’s going to happen to property taxes. What he’s not talking to Mainers about is what’s going to happen in the out-years of the next couple of budgets.”
What lawmakers didn’t say
— Very few Republicans have endorsed LePage’s overall tax reform plan, though some of them are quick to laud his goal of reducing the income tax. Many of them, including LePage, attacked Democrats during the last legislative session for balancing the state budget with temporary increases in the sales, meals and lodging taxes and campaigned throughout 2014 on the promise that they would not vote for tax increases. Several GOP lawmakers have told the BDN that they will have a hard time supporting the budget as it is currently proposed, though not on the record.
— While Democratic lawmakers say they want to work with the governor and that portions of his budget proposal have merit, the Maine Democratic Party continues the attack. A press release forwarded by the party after LePage’s speech called his budget “a failed prescription for economic growth.”
— Bipartisanship in the Legislature was lacking Tuesday during one of the first major committee votes of the session. Democrats and Republicans on the Taxation Committee split along party lines over a state and federal tax conformity bill that in past years has been routine.