Budget Committee forwards responsible tax conformity bill

Posted: February 03, 2016 | Appropriations and Financial Affairs, Senator Valentino

AUGUSTA — The Appropriations and Financial Affairs Committee on Wednesday voted 6-5 to forward a tax conformity bill that extends crucial tax credits retroactively for 2015, putting more money in the pockets of Maine businesses, teachers and homeowners as they begin filing their taxes.

“This bill will address a need for our business community and other tax filers who must know their tax obligation for 2015 right now, so that they can file their taxes on time,” said Sen. Linda Valentino, D-Saco, the lead Senate Democrat on the Appropriations Committee. “Extending tax credits for one year gives filers the information they need, while not knocking the legs out from under the Legislature, which has other funding requirements this year. We hope our Republican colleagues will take ‘yes’ for an answer.”

Democrats and Republicans are in complete agreement regarding conformity for one year. However, the GOP members of Appropriations opposed the bill, saying they want to extend the tax cuts permanently, while only providing concurrent funding for two years.

Unlike Congress, Maine is required by law to have a balanced budget. Simply put, the state cannot run on deficits the same way the federal government does.

“This is not unlike when Maine families sit down at their dinner tables to craft their budget. While  they might love to pay their mortgage for two years, they can’t do that without knowing if they can afford groceries for this month,” said Rep. Peggy Rotundo, D-Lewiston, House Chair of Appropriations. “We need to balance our budget too. This is about fiscal responsibility, and realizing that we have serious needs before us, only some of which are currently known.”

Democrats’ Plan:

  • Fully funds 100 percent of the governor’s tax conformity request for one year.
  • Fills in the revenue shortfall with $9.5 million from the tax relief fund; $6.1 million in savings from debt service; and $1.2 million in unused personnel funds.
  • Preserves the ability of the Legislature to address other critical state needs.
  • Provides an opportunity for further debate on several provisions including the Maine Capital Investment Credit, a Maine-based credit created to fight the recession, but makes up the bulk of the governor’s tax conformity proposal. Further conversation will help ensure benefits support Maine’s economy, and not out-of-state businesses’ bottom lines.

Republican plan:

  • Extends tax cuts in perpetuity, while filling revenue shortfall for only two years.
  • Steals casino revenue currently designated for education to pay for tax cuts, a move that will inevitably drive up property taxes.

Other upcoming fiscal needs:

  • New investments in fighting Maine’s drug crisis.
  • $23 million to fill a local education shortfall, necessary to prevent painful property tax hikes.
  • Gov. LePage’s proposed raises for all law enforcement officers.
  • Initiatives to provide veterans with the services they need, as outlined in the recent Report by the Commission to Strengthen and Align the Services Provided to Maine’s Veterans.
  • The impending federal clawback of funds from the Riverview Psychiatric Center, as a result of DHHS mismanagement.

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