Budget may be bad for business climate

AUGUSTA – Maine’s business community is warning that the supplemental budget is bad news for business and Maine’s economy because of several fee increases that will have to be paid for by business.

“The Maine Economic Growth Council has an indicator, a bench mark of economic health, and they look at the cost of doing business in Maine,” said Chris Hall, Vice President of the Maine State Chamber of Commerce. “As of this March we were 10 and a half percent higher than the national average, and this budget adds to that cost – so it can’t help our economy.”

Hall said the big question is whether any of the items approved by the Democratic majority of the Appropriations Committee are changed by the full Legislature. He said the dozens of filing fee increases in the budget will be paid by various businesses and self-employed individuals and added to their cost of doing business.

There are 72 separate filing fees in the Secretary of State’s office that are increased in the proposed budget. The fees cover everything from filing articles of incorporation to the registration of a partnership. The actual fees range from a $5 increase for several fees to out of state corporations that will have their annual filing fee go from $20 to $150.

“Most of these fees have not been increased in more than a decade,” Rep. Scott Cowger, D-Hallowell, told fellow members of the Appropriations Committee during budget discussions. “It’s better than the tax filing fee proposal.”

Cowger was referring to a proposal by Gov. John Baldacci that would have imposed a $100 fee for “information” filings required of many business entities like partnerships. Maine Revenue Services wanted the fee to fund additional auditors to make sure taxpayers are reporting all the income they receive from such “pass-through” business structures.

Finance Commissioner Becky Wyke came up with the various fees that were adopted by the majority of the committee after the panel rejected the fee for filing information returns. Her proposal raises about $2.2 million, which amounts to about $2 million less than Cowger’s plan.

“We looked at the fees in other states and made adjustments to the original proposal that we think make them more acceptable,” she said.

Some in the business community are also concerned at the way the fees were determined: without any public notice or public hearing. David Clough, Maine Director of the National Federation of Independent Businesses, said filing fees should have some relationship to the cost of the service the state is providing to the business.

“What they are doing is using the fees as a back-door way to pay for other government services,” he said.

There was little broad debate about the impact the budget would have on the state’s business community during committee deliberations. But there were a few public exchanges about the potential problems the various revenue raising measures would have on the business climate.

“This is not going to help the business climate,” Sen. Karl Turner, R-Cumberland, said, “and we are already in bad shape.”

But Democrats on the budget-writing panel were quick to respond that additional revenue is needed to prevent cuts or elimination of crucial Medicaid programs.

“The alternative is cuts to programs that most of us will not go along with cutting,” Rep. Joseph Brannigan, D-Portland, said. “We are not going to cut programs that help our most vulnerable citizens.”