Business leaders give legislators mixed grades

AUGUSTA – While business leaders were pleased they did not get hammered by a tax reform plan during the recently adjourned Legislature, they gave mixed grades to the session that left many issues unresolved and deferred.

“Health care isn’t done, and tax reform is still out there,” said Jim McGregor, vice president of the Maine Merchants Association. “There was a lot carried over and a lot undone.”

Several business representatives said they were relieved that the tax reform plan was defeated. Various sales tax expansions led to a unified business effort to defeat the original Taxation Committee plan. McGregor and others said the plan shifted more of the tax burden to businesses while not providing any real reduction in an individual’s tax burden.

Peter Gore of the Maine State Chamber of Commerce said the “good news” from the session was the overhaul of the state’s unemployment insurance program, resulting in a tax reduction for employers of $68.7 million. He said that would provide a boost to companies as they are hit with continued high energy costs and higher health insurance costs.

“And they didn’t do anything about either,” said Tony Payne, executive director of the Alliance for Maine’s Future, a group funded by several state businesses. “Businesses are continuing to see ever higher energy costs and health insurance costs, and they got no help from this Legislature.”

He said the business community is trying hard “to keep its head above water” as government continues to raise taxes and fees on businesses. He said “enhanced enforcement” will mean more audits of companies that are already paying their taxes as Maine Revenue Services seeks to justify the additional resources it was given by lawmakers.

Many bills of interest to the business community were carried over to January.

For example, action on bills raising the minimum wage was postponed as was a measure that would require employers to provide paid family sick leave. Opponents say if it passes, Maine would be the only state requiring paid leave.

Another thorny issue is the legislation introduced by Rep. Janet Mills, D-Farmington, that would overhaul state laws that determine whether a worker is an independent contractor or an employee under state unemployment law.

The law says that to prove someone is an independent contractor and not an employee, an employer must prove that the individual performing the service has been, and will continue to be, free from control or direction of the business or company.

The service provided must be outside the usual course of the business for which the service is performed, or the service is performed outside of all of the places of business of the enterprise for which the service is performed.

Mills’ legislation would change the way the state Department of Labor interprets the “usual course of business” test. She charges it is being applied too strictly by the agency and that it is damaging to an important sector of the economy and slowing economic development.

McGregor said another measure carried over to January that is a major concern of the retail community is a bill before the Judiciary Committee that would establish a “free speech right” at shopping malls. Supporters want the malls to become the new “town squares” where traditionally anyone could congregate and discuss political issues, gather petition signatures and carry on political campaigns.

McGregor said forcing malls to allow such activity is a “serious undermining of private property rights” and an issue likely to generate considerable debate.

“There are a lot of things in the budget that will require cuts in spending, and we are all going to be watching that very closely,” said Chris Hall, vice president of the Greater Portland Regional Chamber of Commerce. “We don’t know where they will go to achieve the efficiencies they are talking about.”

He said that when Democrats proposed reducing reimbursements under the state’s Business Equipment Tax Reimbursement program during budget talks, many in the business community were concerned. He said that and other economic development programs could become budget cutting targets.

Payne said most disappointing to many of his members was the $498 million increase in state spending over the two-year budget. He said in the wake of the Taxpayer Bill of Rights referendum last year, most had hoped lawmakers had “got the message” that spending should be reduced, not increased.

“The business community, in particular, is walking away, saying we are more than disappointed,” he said. “We are anxious to engage in another TABOR discussion.”