Governor Paul LePage wants to use part of a projected increase in state revenues to pay for more tax cuts. He’s included that proposal into a bill that would conform Maine tax laws to changes in the federal tax code enacted in December.
Governor LePage has been working to reduce state taxes since he took office and has had some significant successes. As he enters his final year of office, he wants to further that effort. LePage is proposing to use about $90 million in unanticipated state revenues to pay for an increase in the tax credit for families with children.
He wants to include that provision in the tax conformity bill than many lawmakers thought would be revenue neutral, or close to it.
“This was far from a revenue neutral proposal,” says House Democrat Drew Gattine of Westbrook, who co-chairs the Appropriations Committee. “This goes far beyond simply conforming with the new federal tax code in a revenue neutral way.”
The state piggybacks its income tax on the federal code, because supporters say it is more efficient to rely on IRS auditors to check tax returns instead of hiring state staff. That practice would continue under the LePage proposal, but the goal is to also cut taxes for Maine people.
Rep. Jeff Timberlake, a Republican from Turner, says the Governor is being consistent in his views on taxes. “As I listen to this and understand it, I mean I think the administration looks at it a little bit like I look at it, that this isn’t my money, this is the taxpayer’s money” he says.
Finance Commissioner Alec Porteous says the Governor looks at the revenues that are coming in over estimates not as windfall to be spent on new programs, but as an over- collection that should be returned the taxpayers.
“Return surplus tax revenues to Maine families and continue to shape a tax structure that incentivizes individuals and businesses to reside and invest in our state,” says Porteous.
Several democrats on both the Appropriations and Taxation committees raised questions about specific tax provisions, signaling that they may face difficulty when the bill goes before the taxation committee. For example, LePage proposes a further reduction in the estate tax and additional $22 million tax break for those that inherit large estates that will have to be paid for.
Gattine says there are many other demands on the additional expected revenue that lawmakers may want to consider before supporting another state tax cut, “including services for people with disabilities, services for our seniors who want to stay at home and investments in healthcare that need to be funded.”
The proposal has yet to be printed and scheduled for a public hearing. With so many tax issues facing changes, its likely to be a lengthy hearing, and the legislature is supposed to end this session on April 18th.