WESTBROOK, Maine — Gov. Paul LePage took his budget presentation straight to the people during an hourlong public forum on Wednesday at the Westbrook Performing Arts Center.
About 500 Mainers packed into the theater for a Town Hall-style event, asking questions about the tax reform package that forms the core of LePage’s $6.57 billion two-year budget. For the most part, it was a low-key affair, with LePage and his director of policy and management, Auburn Mayor Jonathan LaBonte, offering quick answers and deflecting criticism.
The most lively point in the evening came when David Levesque, president of the Maine State Bar Association, asked LePage if he’d consider excluding legal services from his plan to broaden the sales tax. Currently, lawyers’ fees are tax-exempt.
“It will hurt people who are already down,” Levesque said. “People seeking legal representation for criminal issues, divorce, bankruptcy, for pursuing a protection from abuse order, all suffer under this proposed tax.”
It’s a question LePage and lawmakers will undoubtedly face from myriad service providers that will be newly taxed under LePage’s plan — from barbers to ski resort operators. But his answer was simple:
“If the people of Maine want to keep the income tax, we can certainly do that,” LePage said. He then turned his attention to the crowd. “How many would rather keep the income tax?”
A smattering of quiet applause.
“How many would rather get rid of the income tax?” he said.
Louder, more widespread applause.
“You have spoken,” LePage said.
The exchange is illustrative of how LePage views his budget. It’s all about trade-offs. After all its provisions take place in 2019, the scheme would reduce the state’s income tax revenue by $1.2 billion. Most of that would be made up for by the increase and expansion of the sales tax to include nearly all goods and services — other than food and medical care — which will bring in an additional $831 billion per year.
But that’s not the only trade-off. LePage’s plan scraps state aid to municipalities, a program that currently costs the state about $64 million per year, which is less than half of what would go from the state to cities and towns under a funding mechanism approved by a past Legislature. To make up the difference, LePage plans to remove the property tax exemption on large nonprofits such as hospitals, land trusts and private universities.
That idea has drawn its share of critics, including some in the crowd on Wednesday night, who asked LePage how he justified taxing nonprofits, many of which provide critical health, education or conservation services.
LaBonte, a vocal advocate of the plan to tax nonprofits, said it’s about ensuring everyone pays their fair share.
“Many of the service center communities like Portland and South Portland have often come to the Legislature and asked for other means to generate [the lost property tax revenue] because plow trucks still have to go by those large nonprofits, fire and EMS, service calls. There is a cost,” he said. “Right now those costs are being shifted to Maine’s property owners.”
Attendees of the town hall meeting were given a pamphlet emblazoned with LePage’s latest slogan, “Moving Maine from Poverty to Prosperity.” It outlined the core elements of LePage’s budget, and also included some new information — a list of towns, along with each one’s 2013 net income tax, proposed tax cut amount, and 2014 revenue sharing totals.
For example, Bangor residents paid a total of about $29 million in income tax in 2013, a total that would be decreased by $8.4 million in the first phase of the governor’s tax cut plan. Meanwhile, Bangor received $2.3 million through the municipal revenue sharing program to help pay for local services such as road maintenance, police and fire departments.
By 2017, LePage’s budget would do away with the revenue sharing program altogether, a point of contention to local officials throughout the state, who argue the reduction in state aid will force them to raise property taxes. But LePage says the trade-off is worth it.
“You’ll see that any loss in revenue sharing pales in comparison to the hundreds of millions of dollars Mainers would keep under my plan,” LePage said in the booklet.
However, the arithmetic presented there doesn’t show the whole picture: It doesn’t account for the additional sales tax Mainers would pay under the plan, nor the decreased federal tax deduction the budget would cause for many.
When asked by an American Legion member whether he believes his plan would pass the Legislature, LePage said he was optimistic but was planning for all contingencies.
“I’m willing to put the energy in to help make it pass,” he said. “I do believe some Democrats — and some Republicans — will be against it. If they say no, then we know [they] like the high taxes. Then some of us will have to consider where we retire.”
Follow Mario Moretto on Twitter at @riocarmine.