AUGUSTA, Maine — With precious little time left before a two-year state spending plan must be passed, the top Democratic budget negotiator said Friday there’s little chance for a comprehensive tax reform package identified by Gov. Paul LePage as his top fiscal priority.
“It’s difficult, at this point, to do any meaningful kind of tax reform,” said Rep. Peggy Rotundo, D-Lewiston, the House chairwoman of the Appropriations Committee.
Friday was the original deadline set by Rotundo and Republican Sen. Jim Hamper of Oxford, the committee’s Senate chairman, but the group’s work is far from finished. Appropriators are eyeing May 29 as a target date to finalize a spending plan for fiscal years 2016 and 2017.
That plan must be in place by July 1 and will require two-thirds majority support in both the Democrat-controlled House and GOP-controlled Senate to meet that deadline.
LePage kick-started a robust tax reform conversation in January, when he unveiled a $6.57 billion budget proposal centered on a $300 million income tax cut, paid for in part by an increased sales tax and expansion of the goods and services to which it’s applied. The governor’s plan also would have eliminated the estate tax and reduced the corporate income tax.
Republicans bristled at a plan that so closely resembled one they campaigned against in 2010. Democrats put forward a counterproposal they said was a “better deal” for the middle class, but for months, the GOP remained silent.
Last week, Republican lawmakers came forward with their own tax reform proposal. Much to LePage’s chagrin, it was not as transformative as his comprehensive plan.
Still, it apparently set the stage for negotiations among legislators to begin in earnest.
But Rotundo said negotiations are impossible because Maine Revenue Services has refused to conduct and distribute the analysis of the GOP plan that the Appropriations Committee has requested.
Maine Revenue Services operates under the purview of Gov. Paul LePage. The agency’s reluctance to hand information to the Appropriations Committee is reminiscent of last session, when LePage instructed his deputies not to appear before the committee to answer questions. That’s prompted some to wonder whether LePage, frustrated over the apparent direction of tax reform talks, had ordered Maine Revenue Services not to play ball.
“We don’t have the cooperation of the Maine Revenue Services at this point. We haven’t gotten anything back from them,” Rotundo said Friday. “You can’t put together a tax package without analysis, and without good numbers.”
Efforts Friday to ascertain why Maine Revenue Services had not yet responded to the Appropriations Committee were unsuccessful.
Hamper, however, said he’s still optimistic that some manner of tax reform could make it into the final budget bill that the Appropriations Committee sends to the full Legislature.
“I want to see something along these lines in the budget,” he said. “I want us to do something this time around.”
Late Friday afternoon, Republican leaders from the Legislature and LePage issued a joint statement, indicating that their disagreements on comprehensive tax reform had forced them to refocus their efforts on a simpler goal — income tax cuts.
“We all firmly believe the next budget must include meaningful income tax cuts that allow Mainers to keep more of the money they have rightfully earned,” House Republican Leader Ken Fredette, Senate President Michael Thibodeau and LePage said in written statement.
“The elimination of the income tax is a priority for Republicans. We will continue to work together to reduce the income tax until it is gone once and for all,” the trio said.
Democrats have stressed that any tax cuts must focus relief on the middle class, and must be paid for not just in this two-year budget, but into the future. So far, they’re unconvinced that the GOP proposal meets those criteria.
So the stalemate continues into next week. Work sessions on the budget are scheduled to resume Tuesday in the Appropriations Committee.
Follow Mario Moretto on Twitter at @riocarmine.