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It took a late-night, last-minute deal between Democrats and Republicans in Augusta, but state lawmakers managed to pass a supplemental budget last week. The bipartisan breakthrough came just before an important tax deadline for businesses, and after House Republicans had twice voted down a previous version of the proposal.
This deal was far from a sure thing. Democratic leaders had already put out press releases on Thursday night criticizing House Republicans before the agreement finally materialized. It ended up receiving nearly unanimous support in the early hours of Friday morning, safely above the two-thirds threshold needed for passage in both chambers of the Legislature.
At the center of this debate has been tax conformity and whether the state would update tax laws to mirror changes at the federal level, particularly when it comes to fully exempting all forgivable Paycheck Protection Program (PPP) loans from state income tax. Leading up to last week’s negotiations, Republicans had already secured a significant victory by getting Democrats to agree to full PPP conformity.
Gov. Janet Mills didn’t initially call for full PPP conformity, and later proposed exempting the first $1 million in PPP funds from state income tax, which covered 99 percent of the state’s businesses. Republicans ultimately closed the remaining gap and Democrats added a tax break for Mainers who received unemployment benefits, well before the late-night negotiations.
But Republicans wanted more, including a tax break on foreign-derived income that would have helped only a handful of Maine businesses and cost $8.4 million. It would have been a real shame if relatively small points of disagreement like this one had derailed the whole supplemental budget. Thankfully, they did not. Republicans didn’t get this tax break in the final deal, but holding out did get an agreement to study it and $8 million put into the state’s rainy day fund.
“Maine employers and their employees rallied to our call and convinced the Governor and Democrats in the legislature to see the wisdom of supporting the people who will lead our economic recovery,” House Republican Leader Kathleen Dillingham said in a Friday statement. “In the end we commend our Democratic colleagues, the leadership of Speaker [Ryan] Fecteau, and his willingness to listen to achieve a bipartisan result.”
It’s good to see the Republicans embracing their win, and embracing bipartisan cooperation.
“We’ve passed a bipartisan supplemental budget with a great deal of tax relief for 28,000 businesses, the 250,000 Mainers they employ and over 160,000 Mainers who were out of work in 2020,” Fecteau said in his own Friday statement. “These are businesses in our communities and businesses owned by people we know. These are people who have given blood, sweat and tears to survive the pandemic. This was a vote to stand with them. I couldn’t be more proud of how this compromise came together.”
Last week’s negotiating success, though later and longer to develop than it needed to be, should inform the upcoming back-and-forth over Mills’ $8.4 billion biennial budget proposal. It should emphasize to the Democratic majority that minority Republicans have some good ideas that can help shape balanced policy. And it should emphasize to Republicans the importance of taking “yes” for an answer.
Both the Democratic and Republican state parties were quick to pat their own members on the back for their roles in getting this supplemental budget, which is more than $250 million and includes spending reductions because of the pandemic, across the finish line. From our perspective, extra credit goes to Sens. Brad Farrin and Rick Bennett, two Republicans who broke early from their party to work toward a final compromise. These senators supported an earlier version of the supplemental after securing additional funding for veterans services.
The truth is, there’s plenty of credit to go around. This supplemental deal would not have provided tax relief to as many businesses, including the Bangor Daily News, if not for Republican persistence on PPP conformity, and might not have come together at all if not for Democratic patience to keep compromising.
Ultimately, having the two parties doing a bit of jockeying for position over who gets to take credit for a positive action is way better than them pointing fingers over who deserves the blame for inaction. It’s a refreshing change of pace from what we’ve seen in Augusta at various points in the past year, and something for lawmakers to build around heading into even more complicated negotiations about the two-year budget.