March 29, 2024
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Tax reform measure passes Baldacci lauds ‘historic moment’

AUGUSTA – By considerable majorities, the Maine House and Senate voted Thursday night to enact a complex property tax reform bill touted by proponents as the state’s best hope for reducing Maine’s heavy tax burden.

The bill, LD 1, passed by a vote of 95-49 in the House and 23-10 in the Senate.

Described by Gov. John E. Baldacci as a “historic moment,” the legislation will be signed into law today in a special ceremony in the governor’s office with legislative leaders.

Because the bill did not receive a two-thirds vote, it will not become law until 90 days after the Legislature adjourns, meaning it won’t take effect until September.

A two-thirds vote would have allowed the bill to become law as soon as the governor signs it. Retroactive provisions added to the bill, however, should prevent tax relief from being delayed, backers said.

The governor downplayed his disappointment over the voting margin, and instead focused on achieving “real relief for the people of Maine.”

“The people of Maine have been waiting for this and it’s been a long time in coming,” Baldacci said on a live Maine PBS news show aired after the vote. “We’ve actually been able to lower property taxes without raising taxes.”

By changing the education funding formula, adding new government spending caps, and expanding existing tax relief programs known as the circuit breaker and homestead exemption, the governor maintained his policies will save the average property owner around $207 annually and push Maine down into the middle of states nationally in tax burden ranking.

Democratic and Republican leaders held decidedly different positions on Thursday’s vote, although there were some Democrats who voted against LD 1 and more than a handful of Republicans who voted for it.

“I don’t feel it provides any tax relief,” said Senate GOP leader Paul Davis of Sangerville. “In fact, I’ve got some people in my district who will actually be getting a tax increase and that’s unacceptable in our minds if you’re trying to provide tax relief.”

House Majority Leader Glenn Cummings, D-Portland, said the House had proved it could deliver tax relief to Maine residents.

“We’re very pleased,” he said. “With these [new spending] caps in place, local residents will be guaranteed that the state’s increase in education funding will directly translate into property tax savings, and not just increased spending.”

Driven by last June’s referendum to increase the state’s share of local education funding, the bill incorporates a revamped formula for school funding known as the Essential Programs and Services model.

The bill provides $250 million to begin the process of increasing the state’s share of local education costs from 43 percent to 55 percent over the next four years – a timetable opposed by most Republicans and a few Democrats.

Some lawmakers have argued that the new education funding formula places rural communities at a disadvantage over more urban service center areas, and pits poorer northern towns against richer southern municipalities.

Earlier in the day, with seven members absent, the House failed to enact LD 1 with a 92-51 vote because the bill carried an emergency provision requiring two-thirds approval. The House tally fell nine short of the 101-vote threshold.

With one member absent, the Senate later came closer, approving the bill 23-11 in a preliminary vote. The tally was only one shy of the 24-vote threshold required for a supermajority.

Sen. Dennis Damon, D-Trenton and Senate chairman of the Legislature’s Committee on Property Tax Reform, said it was important to try to achieve two-thirds support in the Legislature to send a message to voters that lawmakers understood the importance of the property tax issue and the need for decisive legislative action.

Additionally, he said school districts needed to know the level of the state’s commitment to education funding from the Legislature as local officials prepare their budgets for the coming year.

Efforts by Democratic leaders and the governor’s office failed to win over some of the negative votes. Republicans tried to extract a promise from the governor that he would not support a majority budget if they agreed to deliver two-thirds support for the property tax bill.

Baldacci reportedly would commit only to “working toward” a two-thirds budget, and in the end, GOP leaders could not guarantee they could deliver enough votes in the House for two-thirds support on LD 1.

Senate and House Democratic leaders resolved the problem by stripping out the emergency enactor provision in the bill that would allow the measure to become law with simple majority votes.

Many proponents, however, were glad to see the bill pass under any circumstances. During a morning news conference, the Maine Chamber of Commerce, the American Association of Retired Persons and the Coalition for Reasonable Tax Relief for Maine threw their support behind LD 1.

David Flanagan, spokesman for the coalition, said the legislation should begin the process of diminishing “the state’s terrific tax burden” that deters new businesses from locating in Maine.

Emphasizing that lawmakers will require “the political will” to hold the line on state spending, Flanagan still thought the legislation represented a turning point at the State House.

“Up until now, it’s been the practice of this state to spend every nickel that comes in,” he said.

The Associated Press contributed to this report.


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