AUGUSTA, Maine — With legislative hearings starting soon on Gov. Paul LePage’s two-year budget plan, a liberal group says it would raise taxes on average for four-fifths of Mainers and the administration says it would cut health coverage to thousands.
Reaction on the final budget plan of the Republican governor’s tenure since its release earlier this month has been muted: Democrats have stood against tax and welfare changes while lawmakers in LePage’s party have been quiet on many specifics, signaling that the budget passed this spring will look far different than the one LePage posted to a state website late Friday night.
LePage has seemed resigned to that, saying he’ll soon restart weekly town hall meetings to rally support statewide and telling WGAN he’ll convince his audiences “that prosperity can be had in Maine” if constituents pressure lawmakers to pass his plan.
His idea of prosperity?
A $6.8 billion document that lowers the income tax and flattens it at a rate of 5.75 percent by 2020 while broadening the sales tax base, reducing MaineCare eligibility for able-bodied parents and tightening limits on cash assistance.
With Republicans controlling the Senate and Democrats controlling the House of Representatives, LePage faces long odds to get what he wants. The last two state budgets have been passed over his veto.
But he has provided a starting point. Here’s how the big tax and welfare changes would impact Maine.
The LePage administration is touting big income tax cuts over the governor’s tenure, but a liberal group says the budget would raise taxes on the bottom 80 percent of Maine taxpayers.
LePage’s budget would make big changes to Maine’s tax code. It’s not quite as aggressive as the plan he teased before the proposal’s release or proposed two years ago, but it’s built around a similar premise: reducing income taxes and broadening sales taxes.
He would reduce Maine’s top income tax rate of 10.15 percent — which reflects the current top rate of 7.15 percent plus the 3 percent surtax for income over $200,000 that was approved by voters in November — to 5.75 percent by 2020; broaden the sales tax to include amusement parks, concerts, theaters, household services including, snow removal and lawn care; and personal service providers such as barbershops and salons.
There are other personal tax changes, too: It limits Maine’s Homestead Exemption to people age 65 and older and makes other property tax changes, expands a child care credit and pension exemptions and it would eliminate the estate tax.
An analysis from LePage’s budget department looking at just the income tax changes between 2010 law and what’s proposed for 2020 show a $600 million reduction, with average cuts of just over 29 percent for all income groups.
But a broader analysis from the liberal Maine Center for Economic Policy looks at the budget’s income, sales, property, child care and pension tax changes and found it would raise taxes over current law for the bottom 80 percent of Maine households — those with less than $92,000 in annual income.
The top 1 percent — those who make more than $384,000 — would see an average tax cut of $23,000, while people making between $22,000 and $37,000 would see an average increase of $109, according to that analysis.
David Heidrich, a spokesman for the Maine Department of Administrative and Financial Services, said the governor’s tax reductions and the current proposal are “part of a deliberate, structured plan aimed at making Maine more competitive,” but Sarah Austin, a MECEP analyst, urged rejection of the budget and called the tax changes “lopsided.”
The budget would also cut 18,000 people from the state’s MaineCare rolls and limit the state’s dwindling Temporary Assistance for Needy Families program.
Welfare reform has been a key part of LePage’s agenda, and this budget continues that crusade, with his administration saying it cuts Department of Health and Human Services funding by $140 million over the baseline budget.
Major proposed cuts affect two programs: MaineCare, the state’s version of Medicaid, the federal health care program for the poor, and Temporary Assistance for Needy Families, which aids poor families with children.
These programs have been cut heavily during LePage’s tenure. His administration touted culling 67,000 from the MaineCare rolls between 2011 and 2015 and the number of children in TANF has gone from more than 25,000 in January 2011 to less than 7,800 in December 2016.
The budget would eliminate MaineCare eligibility for able-bodied parents who earn more than 40 percent of the federal poverty level. DHHS Commissioner Mary Mayhew said the MaineCare cut would reduce 18,000 people from the rolls and it would save an estimated $33 million.
It also would shorten the state’s five-year lifetime TANF limit to three years. Based on Friday’s enrollment, that change would remove just more than 1,500 of the children left in the program — a 19 percent cut. There are many other welfare tweaks in the proposal, including an elimination of state General Assistance funding.
“What we need to be promoting is smaller government, a reduced tax burden and more jobs in this state that are in the best interests of these individuals and their long-term success,” Mayhew said.
But Democrats’ views of these types of changes have been dim and advocates have blamed a rising number of children in poverty on past TANF reductions. It’s a conflict that will play out in the State House again between now and the spring.
Correction: An earlier version of this report incorrectly stated that legislative hearings on the two-year budget will start this week. The hearings this week will be on Gov Paul LePage’s proposed supplemental budget for the current fiscal year.