AUGUSTA — The Legislature was no closer to a state budget deal Monday after on-and-off talks between State House leaders over several days failed to produce a breakthrough in a stalemate over education funding and taxation, leaving Maine poised for a government shutdown when the current budget expires July 1.

Top Democrat and Republican legislative leaders met for about six hours Saturday, and House leaders were seen going to and from private meetings Monday, but there has been no breakthrough on what’s expected to be a $7 billion two-year spending package. The state constitution requires lawmakers to pass a balanced budget by June 30, the end of the fiscal year. Failure to do so triggers a shutdown of all but essential government services.

Although behind-the-scenes talks were continuing Monday, there was no formal meeting of a special six-member committee of conference that was set up last week in hopes of reaching a budget deal that would garner the needed two-thirds support to become law on time and to withstand a likely veto by Republican Gov. Paul LePage.

Barring an agreement, state workers could face furloughs and days without work and pay if state government shuts down. Some of those workers and their union representatives were on hand Monday urging legislators to cut a deal, as other advocates held signs asking lawmakers not to repeal a 3 percent tax surcharge on household income over $200,000 that was passed into law by voters in November.

The new revenue is meant to bolster state funding to public schools so the state will cover 55 percent of education costs, as directed by voters in 2004. But the new law also gives Maine the second-highest state income tax bracket in the nation, at 10.15 percent.

That’s a prospect that Republicans and LePage say they won’t accept, while Democrats have said the money that the new law generates, estimated at about $320 million over two years, needs to be replaced with another stable funding source if they are going to agree to reduce or remove the new surcharge.

While Democrats have said they have a responsibility to follow voters’ intention, they also have suggested they would accept $200 million in new funding for schools.

Senate Republicans, meanwhile, say they would agree to $110 million in new funds for schools, and House Republicans have said their number is between $50 million and $75 million, but they also want education reforms, including moving Maine to a statewide teacher contract and limiting how much the state funds local school administration in an effort to push more consolidation between school districts.

House Speaker Sara Gideon, D-Freeport, has said cutting state funds for administrative costs is a non-starter with Democrats.

LePage kept the surcharge in the budget proposal he presented in January, but he lowered the underlying tax rate, effectively eliminating the hike on high-wage earners.

While Democrats have offered to lower the surcharge to 1.75 percent and to only apply it to income over $300,000, Republicans have remained steadfast that Maine’s top income tax rate should be decreased, not increased.

They’ve argued that the new surcharge will negatively affect many small businesses and punish high-wage earners, pushing them away from Maine and leading to less income tax revenue for the state, not more.

Jim Cyr, a spokesman for Senate President Mike Thibodeau, R-Winterport, said Monday that Thibodeau remained optimistic the leadership would reach a deal and avert a shutdown.

“He remains confident that an agreement that will get two-thirds support in each chamber can be reached,” Cyr said.

Mary-Erin Casale, a spokeswoman for Gideon, said the special budget committee was not going to meet until “House Republicans have an offer that is closer to what has been put on the table by Democrats and Senate Republicans.”

Sen. Troy Jackson, the Senate minority leader, accused House Republicans of trying to “extort” additional concessions in the final days of the budget process.

All four legislative leaders met Saturday, but did not meet Sunday or Monday, and it was unclear whether they would meet again.

“We have come to a place where we are very close. Everyone has given and we feel like we’ve given more, but we can’t be greedy . . . and we need to get a budget,” said Jackson, D-Allagash. “There’s no time to waste. I really don’t know why we haven’t met today. But after what we saw (from House Republicans) on Saturday, it certainly seemed like we were further apart, so maybe it was good to take a day off.”

The Legislature would need to pass a budget proposal by Thursday at the latest to limit a government shutdown to a day or two, provided that LePage takes his full 10 days to consider the bill before vetoing it, signing it or allowing it to become law without his signature.

The last time Maine experienced a government shutdown was in 1991, when a disagreement between Republicans and Democrats on an overhaul of the state’s workers’ compensation system led to a stalemate that shuttered government for 16 days.

The shutdown shut down state parks, saw furloughed state workers protesting the Legislature in large numbers, closed many state departments that provide services, licenses and inspections, and sidelined highway work crews in the middle of the construction season, among other effects.

Staff Writer Kevin Miller contributed to this report.

Scott Thistle can be contacted at 791-6330 or at:

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