Lawmakers slog through tax-relief measures

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AUGUSTA – The Legislature lumbered through piles of bills and amendments Thursday as debate over property tax relief reached a dizzying level of complexity.

With no hard evidence of accord among either Democrats or Republicans, two senators announced they were prepared to introduce a resolution that would commit the Senate to endorsing a June ballot question that calls for a major infusion of state money to bolster aid to local schools and ease local property tax pressures.

But the resolution unveiled by Sens. Kenneth Gagnon, D-Waterville, and Arthur Mayo, R-Bath, added that such an endorsement would come with conditions, asserting the legislators’ intent to amend the citizen initiative championed by the Maine Municipal Association to make its implementation – if enacted – more gradual than originally planned.

“This at least says something to the public,” Mayo told reporters as tax relief negotiations elsewhere dragged on inconclusively.

The post-referendum change contemplated by Gagnon and Mayo would give the state four years to add $240 million to its local school contributions, rather than requiring the increase to be put up immediately.

Nonetheless, representatives of the MMA and the Maine Education Association, which is also backing Question 1A, welcomed the senators’ proposal.

Not so pleased were Democratic House Speaker Patrick Colwell and Gov. John Baldacci, who like many lawmakers have long opposed the pending ballot question.

Colwell caustically contrasted the amount of money needed to comply with the provisions of 1A – $240 million – with a Democratic Senate caucus tax relief plan that was criticized in a number of quarters for being too ambitious. The Senate Democratic plan would raise more than $115 million by raising the sales tax by a penny.

“Twice as expensive as the option they were putting forward as their own plan,” Colwell said. “It costs twice as much money. Why wouldn’t they endorse it?”

Baldacci spoke less sharply but no more favorably of the senators’ resolution.

“There’s no guarantee of property tax relief” in the pending citizen initiative, he said. “I don’t see it in this proposal.”

As floor action ebbed and flowed, aides to the presiding House and Senate officers asserted that the session would draw to a close within hours.

Earlier, Senate Democrats met as a group with Baldacci and expressed a willingness to consider moving off their insistence on a sales tax hike as the way to finance expanded property tax relief initiatives.

House Democrats had been talking about increases in taxes on alcohol and tobacco.

After Baldacci’s meeting with Democratic senators, it became clear that at least some lawmakers were looking at the revenue potential available through a state fee on water extraction that might be paid by the bottled water industry.

There were no immediate signs of enthusiasm from the governor. Administration officials suggested there could be further discussion but that the suggested tax would not match Baldacci’s orientation toward economic growth.

“We’re just continuing to talk with the governor, with the House, to see what we can come up with,” said Senate Majority Leader Sharon Treat, D-Farmingdale. “Obviously, we’re on a short, speeded-up timetable.”

House Minority Leader Joe Bruno, R-Raymond, was dismissive of the water extraction fee.

A Republican negotiator, meanwhile, said bipartisan talks about new state borrowing had flagged.

Sen. Karl Turner, R-Cumberland, said in midafternoon that nearly 24 hours had passed since the last round of discussions among members of a small working group. The Appropriations Committee had already split along party lines over an acceptable level of bonding.

Later, the Baldacci administration was reported to be involved in talks on a potential borrowing compromise that would hold new bonds to just under $50 million, including $20 million for the Land for Maine’s Future program.

Thursday, with a possible spillover into Friday, was being treated by House leaders as the finale of this year’s extended legislative session.

With bond talks stalled and tax relief proposals still being batted around freely, the push for adjournment in some ways ran counter to the desire of some for more negotiations.

A supplemental budget bill on which Democrats and Republicans parted ways was finally enacted in the Senate and sent to Baldacci, who signed it almost immediately.

The measure was designed in large part to close a $128 million Medicaid shortfall.

It includes $15 million in additional state aid for local schools as well as increased funding for the state’s strained prison system. Built in were about $60 million in reductions in the state Medicaid program.

Baldacci told reporters who watched him sign the bill that he was well aware “when you’re making cuts they’re not the most popular thing in the world.”

The Democratic chief executive maintained that the package had been put together to retain essential social services for “the most vulnerable” and at the same time rein in government expenditures with an eye toward “keeping Maine competitive.”

Explaining GOP opposition to the budget measure earlier this month, Turner said it relied too heavily on one-time savings, which he pegged at about $67 million, and contained too many taxes, fees and fines, which he estimated at $29 million.

Baldacci told reporters he remained hopeful about a tax reform deal but added that whatever happened would not silence public concern or provide a permanent solution.