AUGUSTA – As lawmakers struggle to close a budget gap that could reach $220 million, members of the Legislature’s Taxation Committee are suggesting changes to the circuit-breaker property tax relief program and the business equipment tax reimbursement program to plug a portion of the hole.

“Every member of the committee was comfortable with some adjustments to the circuit-breaker,” Rep. John Piotti, D-Unity, House chairman of the taxation panel, told the Appropriations Committee on Monday. “There was some divergence of opinion on the other area we are bringing you today.”

Piotti said several lawmakers want an adjustment to the business equipment tax reimbursement program if there are changes to the circuit-breaker program.

“There is plenty of pain to go around before we solve the budget,” Sen. Joseph Perry, D-Bangor, who co-chairs the Taxation Committee, said in an interview. “There were members who believe that if we are going to cap the circuit-breaker, then there should be a cut in business tax breaks.”

The taxation panel is suggesting that the circuit-breaker program be capped at 2005 maximum income levels or at some other level. Under current law, the upper limit is indexed so that a family making $105,000 a year could qualify for assistance.

“The program has really gone beyond its original purpose to help poor people pay their property tax bill,” Piotti said. “This is not something we want to do, but we think it should be considered.”

In addition to the income cap, a person’s property tax must exceed 4 percent of his income to trigger a benefit. Statistics from Maine Revenue Services indicate that last year 92,565 Mainers received $44.2 million in payments.

“We estimate that is only 45 to 50 percent of the people that are eligible for the program,” said Mike Allen, research director for MRS. “It could be double that number.”

He said there always has been a major gap between the number of Mainers eligible for the program and those who actually apply for payments.

Perry said the cap on the circuit-breaker the Taxation Committee has discussed would achieve approximately $2.7 million in savings. He said there have been discussions “for years” on how to encourage more people to apply for payments under the program, but none have been very successful.

Sen. Richard Nass, R-Acton, said while he wishes more Mainers would apply for the program, it is the most effective program the state has to provide property tax relief.

“We have tried a lot of approaches, and this has worked the best,” he said.

Far more controversial is the option pushed by some Taxation Committee members to either reduce the business equipment tax program across the board by some percentage or eliminate it for what are called “double dippers” who receive a local property tax break but still get a state payment under BETR. Either approach is estimated to save $10 million to $15 million.

“Both [ideas] are bad and would hurt Maine businesses,” said Dana Connors, president of the Maine State Chamber of Commerce. “We understand the terrible budget situation, but the state should not be cutting programs that help create the jobs we need in our state.”

He said either option would send “the wrong message” to the business community and could result in some business owners deciding not to invest because of uncertainty in state tax policy.

Connors acknowledged it would be a “difficult sell” to the general public to continue the double-dip option while other programs are being cut. He said while BETR is a state program and the local tax breaks are granted by individual cities and towns, many will not understand that the two programs together are what have made some development projects possible.

“When you look at high energy costs and the other high costs of doing business in our state, these programs have made the difference in some cases,” he said.

Nass agreed and said he believes Maine has lost some economic expansion projects over the years as the Legislature has made changes to the BETR program.

“We have done it before and I know it can be done again,” he said, “but we should not do it.”

The taxation panel did recommend a package of cuts to Maine Revenue Services that would save $1.3 million by closing the agency’s Houlton office, reducing consulting contracts, eliminating four positions and by cutting back on training funds.

The Appropriations Committee has yet to vote on the MRS cuts or the tax changes.