Gov. Janet Mills arrives at a news conference on Monday, April 12, 2021, at Maine's mobile COVID-19 vaccination clinic in Oxford. Credit: Andree Kehn / Sun Journal via AP

AUGUSTA, Maine — Gov. Janet Mills has largely sided with the business lobby against proposals from progressive Democrats to raise taxes on high earners and scrap at-will employment hurtling toward difficult floor votes.

While the back-and-forth around budget issues has dominated policymaking this year, lawmakers are now tackling a slew of bills around taxes and employee rights. They were introduced at the height of the coronavirus pandemic, which closed or severely hampered most businesses for a time and sent many workers into essential jobs that often paid little.

There has been tension between Mills and a more progressive crop of fellow Democrats in charge of the Legislature since the governor took office in 2019 behind a campaign pledge to not raise taxes. But it has mostly been carefully managed and has not devolved into messy intraparty fights so far.

Talks reached a key step on Tuesday, when the Legislature’s tax committee killed a ream of tax bills from both Democrats and Republicans, but endorsed a plan along party lines from Rep. Mike Sylvester, D-Portland, to place a 3 percent surcharge on income over $200,000 and funnel it toward Maine earned income tax credit.

The business lobby is most threatened by another Sylvester bill that would make Maine only the second state to end at-will employment, which was approved by Democrats in the labor committee a week ago. Peter Gore, a lobbyist for the Maine State Chamber of Commerce, called it his biggest concern of the 2021 session.

“It’s very burdensome and ripe for litigation,” Gore said. “I think it sends the wrong message to the business community.”

But Sylvester, a longtime labor organizer, said both bills are aimed at helping low-wage earners who kept Maine running during the pandemic.

“At the scariest time in the pandemic when most people were washing their hands 50 times a day and were afraid to go out of their homes, the people in the service industry were out there,” he said. “They kept us all going.”

The state’s fiscal landscape has changed dramatically during the pandemic, from doomsday budget projections at the outset to a projected surplus of $940 million over the next two years buoyed by federal aid. Between now and June, lawmakers will deal with new plans from Mills to add hundreds of millions to the state budget — including historic increases to school and local aid — and spend more than $1 billion in federal aid.

Many businesses are struggling to ramp back up, with nationwide worker shortages particularly hitting the hospitality industry as it looks to take advantage of loosening economic restrictions that will lift around the beginning of Maine’s summer tourism season on Memorial Day.

Progressives, however, see opportunities to lift wages and increase protections. They have been met with lukewarm or outright opposition from the Mills administration as they advance certain proposals and hold others — including those around overtime protections and vacation payouts — for the 2022 session.

While Linda Caprara, a chamber lobbyist, hit Sylvester and other Democrats for tax proposals she said would “punish” both successful businesses and people trying to recover, the state sent Michael Allen, the state’s associate commissioner for tax policy, to deliver its opposition.

“These proposals come at a time when the Maine economy is struggling to cope with the impact of the pandemic,” he said in written testimony.

A Maine Department of Labor official cited mostly technical concerns with the at-will bill, wondering how the measure would be implemented and who would be covered. Those issues remain even after the bill was amended to include instances in which employers could fire someone immediately, department spokesperson Jessica Picard said.

“On a practical level, implementing or even trying to gauge its impact if implemented is nearly impossible,” she said.

When asked about the measures at a Tuesday news conference in Auburn, Mills referred a reporter to her plan to use stimulus funds, which puts $260 million towards aid meant to help industries recovering from the pandemic, saying she does not have a position on “each and every one” of the nearly 1,700 bills submitted this year.

Sylvester said he “did not expect easy passage” for his measures but hoped to be able to discuss them further with the administration. Sarah Austin, a tax analyst for the progressive Maine Center for Economic Policy, said the success of Sylvester’s two bills where others failed could prove to be examples of where the Legislature is willing to push the governor.

“There’s an appetite to make the tax code more fair,” she said, but with the influx of revenues and federal aid, “putting money back into working people’s pockets appears to make the most sense.”

BDN writer Jessica Piper contributed to this report.