AUGUSTA — Maine lawmakers gave final approval today to a $6.1 billion general fund budget by more than the two-thirds majority needed so it can take effect by the July 1 start of the new fiscal year, sending the legislation to Gov. Paul LePage who will review it with “a fine tooth comb.”
Lawmakers said the two-year spending package set the state on a new course with $150 million in tax cuts, and pension and welfare reforms. But even supporters acknowledged the budget contained something for everyone to hate, often the mark of a true compromise.
“It is a good budget. Perfect, it is not,” said Sen. Nancy Sullivan, D-Biddeford, who joined a few other Democrats and majority Republicans in giving the budget final passage by a 29-5 vote. It passed 123-19 in the House.
The Republican governor’s spokeswoman, Adrienne Bennett, said LePage will take time in going over the legislation, LD 1043. But LePage has given no indication he would reject it. Maine’s governor also has line-item veto power in appropriations.
“He will be going over the tax portions, the welfare portions of the budget with a fine-tooth comb,” Bennett said.
She ruled out his signing the bill Thursday and noted the governor will be involved in Knox County “Capitol for a Day” events Friday, pushing a signing possibly into next week.
The budget closes a gap between revenues and spending that was estimated at $800 million at the time LePage presented it early this year.
It changes the state’s graduated income tax rates from the present 2 percent rate to zero, and the 4.5 percent and 7 percent rates to 6.5 percent. The top rate would drop from 8 percent to 7.95 percent. Maine income taxes would also conform to the federal personal exemption and standard deduction, and the estate tax exclusion would rise from $1 million to $2 million.
Besides the cuts affecting income and business taxpayers, the bill includes pension rollbacks and changes to the welfare program, including elimination of benefits for legal noncitizens not currently receiving them and a five-year limit for all Mainers who receive federal Temporary Assistance for Needy Families.
The pension and welfare cuts triggered State House demonstrations and packed hearings during the winter, but weren’t as deep as initially proposed. Still, they left public workers and their advocates fuming.
While acknowledging the difficulties in achieving unanimous, bipartisan Appropriations Committee support for the budget, opponents said the spending plan still had too many faults. They said the tax cuts are too deep and pension take-backs do not keep faith with public retirees.
Sen. David Trahan, R-Waldoboro, said the average tax cut would amount to more than $200 under the approved plan and 70,000 Mainers would be removed from the tax rolls.
“Tax reform is not done. We have much more work to do,” said Trahan, who chairs the Senate Taxation Committee.
In a separate budget vote, lawmakers also gave final approval to a $637 million two-year highway spending package, LD 1348, which drops indexing, a system of automatic adjustments in the fuel tax that invariably result in annual increases. LePage included the removal of indexing in his budget, resulting in a loss of more than $5 million per year.
“This is a steady source of income,” said Rep. Edward Mazurek of Rockland, lead Democrat on the Transportation Committee. “It’s a lot of money that has to be made up somewhere.”
Rep. George Hogan, D-Old Orchard Beach, who also serves on the Transportation Committee, said the indexing repeal comes as the highway fund gets less money from the federal government and state general fund.
“The major problem we have in transportation is sustainable funding,” Hogan said before the House’s vote to pass the budget.
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