The Republican House leader who helped broker the bipartisan state budget deal that included a temporary sales tax increase wants to end the tax hike a year ahead of schedule.
Rep. Kenneth Fredette, R-Newport, has submitted a bill that would roll back the half-percent sales tax increase, from its current rate of 5.5 percent to 5 percent in the fiscal year beginning July 1, 2014. The increase is supposed to sunset automatically on June 30, 2015, and deliver an estimated $135.2 million in revenue. If Fredette’s bill is approved, it would eliminate more than half of the projected tax revenue, more than $80.4 million. The increase went into effect Oct. 1.
Fredette said his bill would seek to offset the lost revenue with spending cuts, primarily at the Department of Health and Human Services and in education.
“You can’t look at issues like this without cutting (DHHS) and education,” he said. “I think you have to take a scalpel to that approach and be very surgical. But I think it can be done in a responsible way.”
Fredette’s proposal faces long odds in the Democratic-controlled Legislature. However, it reflects the dissatisfaction among members of the Republican Party’s right flank, some of whom publicly blasted Republican lawmakers for going along with a budget deal that included tax increases. Vic Berardelli, state chairman of the Republican Liberty Caucus, in June castigated Republicans who supported the budget, saying they were cowardly and disloyal to conservative principles.
Fredette took his share of criticism for brokering the budget deal with Democratic leaders. During the floor speech that preceded the House’s override of Gov. Paul LePage’s budget veto, he said the tax increases were necessary to avoid a government shutdown. He also criticized members of his party for “circular firing squads” and intra-party vitriol.
He said Friday that his bill wasn’t an attempt to walk back his decision on the budget.
“It’s a response to Republican principles of limited government, smaller taxes and what-not,” Fredette said. “At the time of the budget debate we obviously had the issue of a state shutdown staring us squarely in the face. That had to be taken into the calculation about … what we did. That’s no longer the case. Now we can go in and take a look at different aspects of that budget and make adjustments.”
Fredette didn’t have any illusions about Democrats supporting his bill.
“They want to continue to fund the welfare state,” he said. “They don’t want to make the tough choices to reduce the spending and welfare programs. I suspect they’ll oppose it for that reason.”
Senate Majority Leader Troy Jackson, D-Allagash, criticized Fredette’s bill.
“It’s a strange bill to come from a Republican leader because Republican leadership proposed and negotiated this tax increase,” Jackson said in a statement. “It was their idea. That said, as a legislature, we all agreed that we’d rather pay an extra half a penny on sales tax than accept the governor’s massive property tax hike that would have impacted every homeowner in the state.”
Jackson added: “I also am not clear why less than six months later, Rep. Fredette would repeal something he supported. The law has been in effect for less than a week. There’s no way to know the impact of this budget decision.”
Maine has the third-lowest sales tax rate in the country of the 47 states that have either state or local sales taxes, according to a recent analysis by the Tax Foundation.
Among the approximately 500 bills that will be taken up next session, over 400 titles were made public by the Legislature’s Office of the Revisor, several aim to amend or undo elements enacted in the biennial budget. Many of the proposals will require funding that may prove difficult to find unless the state’s revenue picture vastly improves. A recent projection for the first three months of the current budget year has shown a $6.7 million revenue shortfall.
Several bills, sponsored by Republicans and Democrats, attempt to restore a rent and property-tax credit program known as circuit breaker. The Legislature eliminated the program in the budget, swapping it for another tax credit initiative that’s since been criticized for providing significantly less property tax relief to low- and middle-income residents.
The new program adopted by the Legislature was expected to save the state $20 million to $25 million, but lawmakers have been hearing complaints from residents who came to rely on the circuit breaker, which provided tax refunds ranging from $479 to $1,600.
Mainers who qualify for the new program can receive a maximum tax credit of $300 a year, or $400 if they are 70 or older. Residents who expected circuit breaker refunds in August won’t get them, and the tax credit won’t be available until 2014. Sen. Mike Thibodeau, R-Winterport, is sponsoring one bill to restore the circuit breaker.
The new slate of bills would be reviewed for the second session, which begins Jan. 7, 2014. However, many of the proposals won’t make it, according to Ericka Dodge, spokeswoman for Senate President Justin Alfond, D-Portland. Dodge said Friday that legislative leaders will approve only between 25 percent and 30 percent of the new bill requests for next session. Those decisions will be made by the Legislative Council later this month.
The second session is supposed to be for emergency legislation, but lawmakers have stretched that definition over the years. Some of the bill titles suggest that their sponsors will have to make a compelling argument for emergency designation, including “An Act to Designate the Lobster Roll the State Sandwich,” “An Act to Change the Statutory Reference to the State Holiday âPatriot’s Day’ to âPatriots’ Day’ ” and “An Act to Allow the Use of Slingshots in Small Game Hunting.”
Other bills are likely to see the light of day and generate serious debate, including two bills by Fredette that would tighten work search requirements for individuals seeking cash welfare benefits and a bill by House Speaker Mark Eves, D-North Berwick, to expand Medicaid, the public health insurance program for the poor, through the Affordable Care Act.