May 25, 2019
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Maine Legislature passes tax conformity, school funding deal

Contributed photo | BDN
Contributed photo | BDN
Maine House Republican Leader Kenneth Fredette of Newport.

AUGUSTA, Maine — A compromise on tax conformity sailed through the Maine Legislature on Wednesday, which should be signed by Gov. Paul LePage and put to rest one of the most contested issues of this year’s session.

The deal was struck and previewed by legislative leaders and the Republican governor on Tuesday. It provides $38 million in tax credits and deductions for Maine businesses and residents and gives $15 million more to schools after projected cuts to state aid next year and establishes a commission to study education spending and performance.

The two bills doing that passed with little debate and opposition, getting unanimous approval in the Maine Senate. Just 19 Democrats in the House of Representatives voted against the conformity portion and eight voted against the funding portion amid concerns that it wasn’t enough.

Neither side got all they wanted in the deal over conformity with federal tax changes, which is usually a perfunctory issue in Augusta. But it wasn’t this year and the debate stretched within a week of March 15, the first corporate tax filing deadline in Maine.

House Minority Leader Ken Fredette, R-Newport, said the deadline was “looming out there” and “business folks were looking for some certainty.”

“At the end of the day, most people were in agreement that we needed to pass conformity,” he said. “I think we could have done it sooner. We didn’t, but we did get it done.”

After the governor proposed conformity in January, Democrats called for $23 million in education funding to offset projected cuts to state aid to schools next year and the phase-out of the Maine Capital Investment Credit. It allows businesses to get upfront tax breaks on property that lessens in value over time, but those types of tax breaks have been criticized for their efficacy.

For that, LePage blasted Democrats for holding conformity “ransom.” Earlier this month, he said he wouldn’t support conformity if it was tied to more spending.

But LePage changed tone in a Tuesday radio appearance, saying while he would “like not to be OK” with new spending, it was “the only way” to pass conformity and he expected to sign it this week. He was in Quebec on Wednesday to meet with the Canadian province’s premier.

Republicans have heralded the Blue Ribbon Commission set up under the funding bill, which will make recommendations next year to reform education spending and improve student performance.

But House Majority Leader Jeff McCabe, D-Skowhegan, said his party will fight for more education funding this session.

“While it’s a step backwards, it’s something,” he said. “It allows our school districts to begin the budget process.”



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