Tax reform talks get sidetracked Special session timing at issue for both parties

AUGUSTA – Top-ranking Republicans met with Gov. John Baldacci on Thursday and said afterward it might be more realistic to extend talks over tax reform and a new state borrowing package through the summer, rather than try to force action by the end of the month.

Baldacci, who spoke a day earlier with Democratic leaders, counseled a step-by-step approach.

“I think the best thing would be to continue the discussions today and tomorrow,” and take things from there, the Democratic chief executive said.

Lawmakers who adjourned this year’s regular legislative session early last Saturday have been waiting to see if and when they might be called back into a special session to take up leftover matters.

Originally, a return to the State House was anticipated for late next week.

But with Democrats and Republicans split over a preferred level of new borrowing and with enthusiasm muted for any tax reform options that have emerged so far, prospects for substantive accomplishment in a short-notice special session are highly uncertain at this point.

Baldacci, after meeting with GOP House and Senate leaders, professed optimism.

“We had a good discussion and they’re going to be talking with Democratic leadership,” he said.

The presiding officers of the Legislature, both Democrats, suggested that was more important when weighing a next step.

“Whether we’re able to come up with some kind of agreement by a week from tomorrow … is somewhat of a moot issue,” said Senate President Beverly Daggett, D-Augusta.

“We’re not going to meet if there’s no reason to meet … I think we will continue talks and we’ll see what happens,” said House Speaker Patrick Colwell, D-Gardiner.

Republicans said they remained open to negotiation but were committed to a no-tax-increase position on tax reform and an $83 million cap on borrowing – about $10 million less than Democratic lawmakers have proposed.

“We are going to be talking some more,” said Senate Minority Leader Paul Davis, R-Sangerville.

The Legislature’s Taxation Committee reconvened Wednesday to resume discussions of tax reform options. After talks ranged over a number of areas for about two hours, no further meetings were scheduled.

Democrats and Republicans on that panel have been split between two versions of Baldacci’s original proposal, although both versions would seek to boost the state’s share of local education costs to 55 percent, as proposed by a citizen initiative backed by the Maine Municipal Association.

Similarly, in the final hours of the regular session last weekend, Democrats and Republican on the Appropriations Committee split over the amount of new borrowing that might be put before state voters in November.

That committee has no sessions scheduled.

Daggett said she was disappointed by Republican insistence on an “arbitrary cap” on new borrowing “that ignores good financial practices.”

Colwell said the focus of tax reform should be twofold – “education funding and property tax relief.”