Johnson Urges Fiscal Responsibility

AUGUSTA  –  The State Senate debated a tax rate measure on Thursday. During the floor debate, State Senator Chris Johnson (D- Lincoln County) introduced two separate amendments attempting to improve the fiscal responsibility of LD 849 “An Act To Provide Tax Relief for Maine’s Citizens by Reducing Income Taxes”.

“First and foremost, it’s important to be sure our state’s fiscal house is in order,” Senator Johnson said. “The problem with the bill as it came before us is that it only looks at the income tax, not the whole picture. My amendments expanded the scope of the bill to address the state’s entire financial situation.  Without doing that you could very well end up forcing the state and towns into financial disaster.”

The bill before the Senate would have automatically lowered the maximum income tax rate to 4% over time if the state generated sufficient surplus revenue to fund that loss of tax revenue for one year. But the cut would have been permanent and unfunded in subsequent years.  State spending has been declining for years, back to levels of a decade ago.

Johnson added, “We also know that further cuts will be painful not only in lost essential services, and community health infrastructure, but continuing as they did last year to push costs onto towns and property taxes through cuts in the circuit breaker program funding and revenue sharing, and not keeping our promise to fully fund education.”

One amendment would have required the following financial items to be in order before reducing taxes: state’s bond rating be AA or higher, projected revenues for the following year exceed expected expenditures, and that the state have sufficient money on hand to meet its annual obligation toward the unfunded liability of the retirement system before triggering automatic cuts to the income tax.

“Tax relief is reasonable on the face, but if it ends up lowering income tax only to increase the local share of education costs, and property taxes, then it only shifts greater burden onto people who can least afford it, which is not in the best interests of Maine people,” Johnson added.  “As I went through the district the tax burden most on people’s minds was property tax.  It is unfortunate that the majority didn’t seek to address this problem and support my amendment to provide tax relief where it matters most.”

The other amendment would have required that the state’s property tax reduction program, the Circuit Breaker, be fully funded, that the State’s Revenue Sharing obligations are fully met and that the state pay its full share (55%) of education costs before the income tax could be lowered.  Both of Senator Johnson’s amendments were defeated on party line votes.

The bill requires further votes in the Senate and House.

#