Tax reform panel gets high praise Baldacci opposes two-year hike in school subsidy

AUGUSTA – Gov. John Baldacci on Tuesday complimented the Legislature’s tax reform committee for its bipartisan work in agreeing on property tax relief legislation, and he all but ruled out a minority proposal he said could bump up taxes.

Baldacci praised the Joint Select Committee on Property Tax Reform for the “tremendous amount of work” it did on what he considers “historic” legislation because of the impact it could have on public spending for important public services.

“I think that what they have come together on is a package that gives immediate relief to property tax payers and especially those that are the hardest hit,” said Baldacci.

The panel late Monday split 12-3 on the package, with a majority voting to stick with Baldacci’s plan for phasing in a major boost in state aid to local schools to 55 percent over four years. Three members favored accelerating the increase over a two-year period.

The committee still must review final language in the bill before it goes to the full Legislature for votes by Jan. 20.

Asked how he felt about the two-year ramp-up of state subsidies, Baldacci said, “I don’t think much of it.”

The governor said it would mean state taxes would have to increase by $90 million and local property taxes would have to be raised by more than $70 million to pay for the package.

“The two-year ramp-up would force a property tax increase, and I don’t think that’s anything we want to be promoting at a time when we have the second-highest property tax burden in the country,” Baldacci told reporters at an informal briefing. “The goal here overall is to reduce our tax burden. It wasn’t to increase our tax burden.”

A legislative Republican leader also praised the committee for doing its work with “a minimum of partisanship.”

“I think the committee did a marvelous job,” said House Minority Leader David Bowles of Sanford. But Bowles also said his caucus still has more questions than answers about the bill.

Bowles believes last year’s Maine Municipal Association-backed referendum calling for increased school subsidies all at once created false expectations because the 55 percent funding could not be achieved without tax increases – which Republicans oppose – or huge program cuts that many lawmakers would find objectionable.

Baldacci, a Democrat, made it clear Tuesday that he would not support any increase that would result in new taxes. Asked if he would consider broadening the sales tax to untaxed goods and services, Baldacci said, “I’m opposed to that. I’m opposed to raising the taxes … sales tax, income tax, property tax.”

“We don’t need it, I don’t support it, I would not support it,” he said.

Acknowledging that the tax proposal as endorsed by the committee would cost more than the package he initially put forth, Baldacci said he’s willing to look for extra funding to pay for it.

“I committed to that,” said Baldacci, adding he plans to “work with the Legislature to identify those funds and make sure those appropriations are made.”

Additional costs are associated with expanded property tax relief through the circuit-breaker program, which supporters say would provide 90 percent of Maine households with relief.

The package also includes an expansion of the Homestead property tax relief program; state, county, school and municipal spending caps, and calls for constitutional amendments that could broaden local tax policy options.