Vitelli introduces bills to strengthen Mainers’ savings, financial security

Assistant Senate Majority Leader Eloise Vitelli, D-Arrowsic, introduced two bills to strengthen the Family Development Accounts program, which helps low-income Mainers save money and plan for a more secure future.

LD 1305, “An Act To Encourage Savings through Contributions to Family Development Accounts,” was the subject of a public hearing before the Legislature’s Taxation Committee on Wednesday. The bill reinstates a tax credit of up to $25,000 for taxpayers who make a contribution to FDA reserve funds. Up to $200,000 in tax credits could be claimed each fiscal year.

FDAs are matched savings accounts for income-eligible individuals and families who want to save money to buy a home, pay for education or training, or start or expand a small business. Participating families open a savings account to be used toward their identified goal, and these savings will be matched upon withdrawal for approved purchases. Participants save up to $1000 in their FDA, and the savings get matched 4:1, up to $4000. Savings can occur over as short a time as six months or as long as three years, depending on the person’s budget or goals.

“Through my career at New Ventures Maine, I saw how FDAs, in conjunction with many of the free classes we offered, helped set Mainers on a path of financial security, learning how to save money routinely, how to better manage their money, and get rewarded for that discipline and growth,” said Sen. Vitelli. “Expanding the availability of reserve funds in the FDA program would help the program reach even more of our community members.”

According to data from the Federal Reserve Bank in St. Louis, U.S. adults currently save just under 6 percent of their disposable incomes. Furthermore, data shows that 40 percent of American adults can’t cover a $400 emergency expense.

LD 1305 “gives Maine taxpayers an opportunity to invest in Maine families, continuing a long tradition of Mainers helping their neighbors and communities,” said Jean Dempster, a financial educator with New Ventures Maine. “The tax credit was previously in place from the beginning of the Family Development Account program in 1999 until the tax credit was repealed in 2015.”

Dempster has served on the Finance Authority of Maine’s (FAME) Advisory Committee on Family Development Accounts since 2008, and currently serves as the committee chair.

LD 1217, “An Act To Clarify the Oversight of the Family Development Account Program,” was the subject of a public hearing before the Legislature’s Innovation, Development, Economic Advancement and Business Committee on Thursday. The bill moves administration of the FDA program from FAME to the University of Maine system.

“The FDA program’s goals are shared by both organizations as they both are supportive and engaged in savings, higher education, workforce development, and economic development,” said Sen. Vitelli.

LD 1217 was introduced at FAME’s request.

We support this move and have full confidence in the University of Maine System and New Ventures Maine to take on this responsibility with gusto and new energy,” said Bill Norbert, Governmental Affairs and Communications Manager at FAME. “It has been our pleasure to have played a role in administering the program over many years, but now is a good time to find a new home for this important and worthwhile program.”

Each committee will hold work sessions on the bill before their committee in the coming weeks.