Senate gives initial approval to Bellows bill to increase fairness for retired state employees and teachers

A bill by Sen. Shenna Bellows, D-Manchester, to eliminate the state income tax on retirement benefits for public employees received unanimous initial approval by the Maine Senate on Tuesday. The bill protects retired workers including firefighters, law enforcement and teachers.

“It isn’t fair that in their retirement, we tax the people who serve and protect our communities – Maine’s firefighters, teachers, and law enforcement officers – while people who retire from the private sector aren’t,” said Sen. Bellows. “It’s all about fairness. Too many seniors are barely getting by, and we make things worse when we tax folks who already sacrificed so much to serve in the public sector.”

Under current Maine law, Maine does not charge state income tax on Social Security benefits but does charge a state income tax on public pension benefits over $10,000. The bill – LD 162 “An Act To Eliminate the State Income Tax on Maine Public Employees Retirement System Pensions” – as amended, would create parity between public and the private sector retirees by increasing the pension deduction for all public pension income.

This is one portion of the inequity felt by retired state employees and teachers. These positions often pay less than similar positions in the private sector, and they are subject to the Windfall Elimination Provision/Government Pension Offset, which reduces retirees’ overall retirement income.

At last year’s public hearing on the bill, the Maine Education Association, Maine Education Association – Retired, Maine Association of Retirees, and Maine State Employees Association, as well as numerous retired teachers and state workers, spoke in favor of the bill. No one testified against LD 162.

LD 162 now heads to the Maine House for further votes and then to the Appropriations and Financial Affairs Committee.