State tax reform bill seems destined to die

AUGUSTA – A bill that would have initiated sweeping changes in the state’s tax policy appeared destined to die between both houses of the Legislature Friday after the Maine Senate overwhelmingly rejected the measure.

Sponsored by Rep. Bernard McGowan, D-Pittsfield, LD 2086 seeks to reform the state’s tax system by dramatically reducing the amount of money municipalities would have to raise in property tax for local education and offsetting those lost revenues with an expanded sales tax.

Under LD 2086, a referendum question would be placed on the November ballot asking the voters if they favor paying the state’s share of local education by reducing the current property tax burden and recouping that loss with revenues raised by a broadened sales tax on many goods and professional services that are currently exempted under state law. The bill’s success pivoted on a companion piece of legislation that would have required a second referendum question to change the state constitution with respect to property taxes. That bill was killed in the Senate Thursday evening.

Although the House voted 79-56 in favor of the McGowan bill Thursday, the Senate’s 31-4 rejection of the measure Friday left little hope of a breakthrough compromise sought by a special legislative committee.

Earlier Friday, Senate Republican Leader Mary Small, of Bath, argued there were no guarantees that the local property taxes would necessarily be lowered under the legislation while it was clear Mainers would be paying millions more in new sales taxation.

“So you would have almost a double taxation without much of a decrease in the local property tax,” she said.