One of the most important matters we dealt with during the first session of the 127th Maine Legislature was the biennial budget. As with many issues this session, with a divided government, much compromise was necessary to provide a financial plan to maintain state governmental services. Below are some of the highlights in this year’s budget:
Ӣ Income Tax Reduction:
Tax Brackets in 2016: $0-21,050 at 5.8 percent, $21,051-$37,500 at 6.75 percent and $37,501 and higher at 7.15 percent.
Tax Brackets in 2017: $0-21,050 at 5.8 percent, $21,051-$50,000 at 6.75 percent and $50,001 and higher at 7.15 percent.
These brackets are based on taxable income. There is a new, increased standard deduction of $11,600 for single filers which will be indexed for inflation starting in 2018.
This income tax package resulted in an overall income tax reduction of $200 million with the highest percentage of reduction going to middle income Maine workers.
There is also a sales tax income credit for lower income residents which are a 5 percent refundable fee. That amounts to approximately $150 for the average single, low income taxpayer.
Ӣ Sales tax info:
There is an expansion of sales tax, or a snack tax, on prepared foods. Sales and Use tax remain at 5.5 percent. Meals tax remains at 8 percent; however the lodging tax, of which 67 percent comes from out-of-state visitors, remains at 8 percent until Dec. 31, 2015 and then rises to 9 percent beginning Jan. 1, 2016.
Ӣ Help for property taxpayers:
Revenue-sharing remains for all municipalities at current levels but the Homestead exemption for all primary residents increases from $10,000 to $15,000 in tax year 2016, with the state reimbursing 50 percent of the additional $5,000. Starting in property tax year 2017 the exemption increases to $20,000 with the state reimbursing 75 percent of the additional $10,000.
Ӣ Military Pensions:
Military pensions are now completely exempt from income tax, with no cap.
Ӣ Inheritance Tax:
The inheritance tax, also known as the death tax, will now be tied to the national rate. The current Maine rate is $2 million and it will now increase to $5.2 million
Ӣ TV Tax :
There is an increase in the service provider tax from 5 percent to 6 percent, effective Jan. 1, 2016 and with repeal exemption for basic cable and inter-state calls.
Ӣ Welfare/General Assistance:
TANF now has a 5-year limit, removing the top cap on TANF, eliminating the so-called welfare “cliff” and encouraging work without fear of losing benefits. This is also referred to as “tiered welfare.”
Ӣ Reformed SNAP, TANF, and SSI for legal non-citizens. All non citizens qualified before, now it has been amended to be only one of three groups (elderly, disabled, and someone with expressive intent for employment.)
General assistance has been adjusted to a 70 percent reimbursement rate by the state to the municipalities statewide. This is most beneficial to rural communities where they are currently paying 50 percent; they will now get 20 percent more reimbursement. However larger cities such as Portland, with their current 90/10 percent arrangement, will be hurt as they will have to pay an additional 20 percent.
Ӣ Waitlists/Nursing Homes:
Our nursing homes statewide are in financial trouble. They will now be receiving an additional $2 million split in half over the biennium. Additionally, Section 18, brain injury patient care, will receive $750,000 more each year.
Section 21, cognitively and physically disabled will receive $5.5 million and PNMI, private non medical institutions, will receive $1.1 million.
Ӣ Education:
Education funding was increased by $50 million, with half of it being paid out each year of the biennial budget. Rural communities receiving the vast majority of this additional revenue.
Overall spending in this budget increased approximately $300 million, which created much of the debate between the parties. That said, half of the increase was keeping revenue sharing in place as well as an increase in education funding. Legislators heard from a lot of municipalities wanting to keep revenue sharing in place and educators continue to push for greater state spending in order to reach the 55 percent mandated level.
Finally all the York County legislators have been meeting throughout this session with Chief Justice Leigh Saufley, as well as Southern Maine Regional Planning Commission, to deal with the serious issue of our Superior Court in Alfred and York. These courthouses have been deemed unsafe and not viable for providing adequate judicial services. There is no secure area for prisoners and they mingle amongst the victims and witnesses in the halls. The need for a new centralized County Courthouse is long overdue. During our work together on this issue we were able to secure $300,000 in funding for a study to research the matter and provide a plan and a place for a new, modern courthouse facility.
— Rep. Robert Foley, R-Wells and Rep. Karen Gerrish, R-Lebanon are both serving their first terms in the Maine House of Representatives, serving House District 7 and House District 20 respectively.
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