AUGUSTA, Maine — Proposals to tax nonprofits and eliminate state aid to local government have not been met warmly by many lawmakers, but another piece of Gov. Paul LePage’s budget plan — a tax exemption of military pensions — is poised to cruise easily through the Legislature.
LePage, flanked by about two dozen veterans on Tuesday in his Cabinet room, touted the proposal as an effort to attract military retirees to Maine, and with them their career experience and spending power.
Shortly thereafter, the plan received the endorsement of the Legislature’s bipartisan veterans caucus.
If the plan becomes law, about $9.6 million in state revenue would stay in the pockets of about 8,000 Maine veterans every year, according to Maine Revenue Service figures provided by the LePage administration.
Few lawmakers are likely to oppose the plan, and even fewer would take the political risk of voicing their opposition to a new benefit for veterans. That means the exemption may well end up being the least controversial piece of LePage’s two-year, $6.57 billion budget, which includes big shake-ups in social welfare spending and the tax code.
Seventeen states, including Massachusetts, exempt military retirement pay from income tax, in addition to the nine states, including New Hampshire, that exempt all income from taxation.
In a presentation to lawmakers, retired U.S. Army Lt. Col. Amedeo Lauria, the service officer for the American Legion Department of Maine, said that if the Pine Tree State joined the ranks of tax-exempt states, it could expect an influx of young military retirees.
While the civilian population generally cannot retire until age 65, military members can start collecting a pension as young as 39. That means plenty of years left to start second careers.
“The military not only protects us and allows us to keep our liberty and our freedom, but they have an awful lot to add and give back,” LePage said.
David Patch, a retired U.S. Navy commander, said he’s a prime example. In the service, he spent five years at the Pentagon working to develop advanced military technology.
After retiring, he moved to Maine in 1996, where he continued his work, eventually helping design welding technology and remote-source, fiber-optic lighting that are both being used on the USS Zumwalt “stealth” destroyers under production at Bath Iron Works.
“Retired military personnel in Maine have senior management, supervisory, technical positions at BIW and other large maine companies. They own and have leadership positions in small companies,” Patch said. They “have pensions that allow them to be more entrepreneurial.”
Rep. Mick Devin, D-Newcastle, a retired Navy commander, said he supported the measure because “veterans have more than earned their exemption through their service.”
Follow Mario Moretto on Twitter at @riocarmine.