Republicans are now pushing to use surplus tax revenue to help plug a $60 million hole in the transportation budget and will offer an amendment to a Democratic proposal to float a highway bond when the Legislature comes back to work next week.
The plan would get Republicans out of a sticky political situation where they found themselves voting against a highway bond they normally would support. They say Democrat leaders promised there would be no additional bonding this year, and then did a double-cross by putting a $60 million federally secured bond on the table.
“It seems as though the passage of time and the unexpected arrival of excess revenue has provided us with a third option,” said Sen. Richard Rosen, R-Hancock County, who first floated the idea of using surplus tax revenue for road and bridge projects in a newspaper column last week. Republican leadership met Monday morning to formalize the proposal and plan a press conference for later this week.
The money Republicans are eyeing is a $50 to $55 million surplus in revenue largely due to personal income, corporate income and sales taxes each coming in $13 million higher than projected. The surplus has been building all year, but was confirmed with tax returns filed in mid-April.
“It’s one-time money,” said Rosen, and “applying it to highways and bridges is an appropriate way to use one-time money in the situation we find ourselves in this year.”
That situation was left hanging at the end of April when legislators adjourned for a three-week break. In the final hours of the session, the Senate approved a $60 million GARVEE (Grant Anticipation Revenue Vehicle) bond that allows states to bond in anticipation of future federal funds. The high-end estimate of interest on that bond is $24 million.
Sen. Ken Gagnon, D-Kennebec County, the assistant majority leader, broke ranks with the rest of Democratic leadership and supported the bond with the caveat that the tax on gasoline, which automatically goes up with the consumer price index every July 1, would be put on hold for this year.
The bond passed the Senate 18-17 and goes next to the House upon legislators’ return on Monday.
House Majority Leader Glenn Cummings said Democrats believe the surplus revenue needs to go into the budget stabilization fund – a position shared last week by the governor’s commissioner of finance, Becky Wyke.
“Our position is that it needs to go into the state’s savings account, the rainy day fund,” Cummings said.
Rosen said Republicans and Democrats agreed to bring that fund up to $100 million by adding $29 million in surplus revenues – identified last year – into that account in the supplemental budget passed in March.
“That’s been accomplished and that’s been protected,” Rosen said of the $100 million rainy day fund.
Sen. Richard Nass, R-York County, the Senate Republican on the Appropriations Committee, said the issue isn’t spending versus saving, but rather spending versus borrowing. “Why would we want to do that borrowing?” when the money is available, he asked.
The highway and bridge money, be it from bonding or surplus taxes, would fill what started out as a $130 million hole in the state’s transportation budget. The shortage is due to rising construction costs and an unprecedented number of earmarked funds in last year’s federal highway budget – money that can only be used for specific projects.
That gap was closed to $60 million thanks to reshuffling of projects by the Maine Department of Transportation and a $15 million allocation in the supplemental budget.
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