AUGUSTA — Republicans passed a bill Thursday to lower income taxes further in the future, but Democrats expressed concern that the measure creates ongoing deficits.
The vote on L.D. 849 came in the wee hours of Thursday morning as lawmakers wrapped up work for the two-year session. The bill, as amended, calls for the state to take money out of excess revenues to lower the income tax, but only after some of the money is used for other purposes.
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Initially, there will need to be a surplus larger than $40 million to have any impact on the income tax; but that number falls to $1.35 million in state fiscal year 2015 after money is repaid to hospitals and the state retirement fund.
Any money left over after those expenses are paid is divvied up by percentage, with 35 percent going to the state’s rainy day fund and 20 percent to lower income taxes.
Other money is set aside for capital construction, operating capital and a retirement allowance fund.
In a statement, Democrats said using the one-time money for an ongoing tax cut will mean less money for local schools and roads.
“This is nothing short of an unfair and unfunded tax shift onto middle class families who are already paying enough in property taxes,” said Rep. Seth Berry, D-Bowdoinham.
However, Speaker Robert Nutting, R-Oakland, said the measure forces lawmakers to set priorities when it comes to spending. “If you have the money, it’s hard not to spend it,” he said. “It’s helpful to lower the bar whenever you can so that when you look at it next time, you already have commitments you have to make to the taxpayers so it’s not all about new programs.”
The bill, which Gov. Paul LePage has yet to consider, will use one-time surplus money to lower the income tax, which will require future legislatures to deal with a funding gap.
The goal is to reduce Maine’s income tax to 4 percent. The top bracket is now 8 percent, but it will drop to 7.95 percent in January. If the state lowers the income tax to 4 percent, state revenue will be reduced by $600 million a year, according to the Legislature’s nonpartisan fiscal office.
LePage spokeswoman Adrienne Bennett said the governor will consider the bill next week. Other bills awaiting consideration by the governor:
* L.D. 1882, which requires the Legislature’s Veterans and Legal Affairs Committee to write legislation that establishes a presidential primary. The bill came on the heels of well-publicized problems with the GOP caucuses this year, in which results were lost and the winner was declared even before all counties had voted. The committee has until Dec. 1, 2012 to come up with a plan.
* L.D. 1705, which sets up a 13- member Task Force on the Prevention of Sexual Abuse of Children. The group is required to recommend ways to increase teacher, student and parent awareness of the problem, actions children may take if they are being abused and available counseling.
* L.D. 1897, an act to create a competitive bid process for future casinos and slot machine facilities. The bill was amended several times, but in general, it prohibits the state from accepting new applications for casinos or racinos after September of this year to give a task force time to study the issue. There is an exception to the prohibition on new applications for the Passamaquoddy Tribe in Washington County, which could apply for a slot machine license. It requires future projects to pay a $250,000 nonrefundable privilege fee and a minimum license fee of $5 million.
* L.D. 1469, which allows veterans and charitable fraternal groups to have up to five slot machines at the lodges. To operate slots, groups would have to have a cash reserve of $2,000 for each machine; pay a $5,000 refundable deposit to the state Gambling Control Board; and pay an initial application fee of $1,000. Applications would be accepted by the state as of Oct. 1, 2013, and the bill would cap the total number of slot machines at 250 statewide.
One bill that will not go to the governor is L.D. 1632, that sought to ease restrictions on those who retire and return to work. The bill died in the House and Senate this week after Republicans no longer supported it.
Susan Cover — 620-7015
scover@mainetoday.com
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