AUGUSTA — As promised, Gov. Paul LePage vetoed legislation Monday that would enact the state’s next two-year, $6.7 billion budget.

In a four-page veto letter that included photos of drug trafficking suspects, crying babies and the disabled, the governor accused both Republican and Democratic lawmakers of dragging their feet before patching together a secretive budget deal that lacks the policy initiatives he favors.

LePage, who had promised reporters a veto message “like you’ve never seen before,” also accused lawmakers of failing to understand his original budget proposal. Finally, he reiterated his vow to continue vetoing all legislation until the Legislature passes a constitutional amendment to eliminate the state’s income tax.

House Speaker Mark Eves, D-North Berwick, said the governor’s veto message was expected and Eves doesn’t believe it will cause lawmakers to abandon the bipartisan agreement he and other legislative leaders drafted.

The Legislature will reconvene Tuesday to vote on overturning LePage’s veto. An override is needed for the budget to take effect Wednesday, the start of the next fiscal year. If the veto stands, state government will shut down because the Maine Constitution requires a balanced budget to continue operations.

An override requires two-thirds votes in the House and Senate.

“Tomorrow, the Legislature has the opportunity to follow through and finish the job that we were able to do in the budget,” Eves said, adding that the spending plan includes an income tax cut, additional education spending and property tax relief. “I think we will have the support we need to tomorrow to override the governor’s veto and make sure those things … happen.”

LePage used his letter to reiterate his criticism over the past two weeks that lawmakers have not adequately funded his drug enforcement initiative or services for disabled Mainers who qualify for Medicaid but are on waiting lists.

The two-year budget includes funding for all of those initiatives, but not the amount that LePage requested in his original proposal.

“The Maine people made it quite clear in November they want tax relief and welfare reform,” he wrote. “As soon as legislators returned to Augusta, they got busy ignoring the wishes of the Maine people. They dilly-dallied for five months, then patched together a business-as-usual budget at the last minute.”

He said the “secretive, late-night” deal was based on the interests of a “handful of politicians, not what is best for the 1.3 million people of Maine.”

LePage surprised many in the Legislature in January when he proposed a budget with a tax overhaul. That plan would have raised sales taxes and removed exemptions on some goods and services to pay for an income tax cut. Ultimately, lawmakers, including Republicans, balked at the proposal, rejecting the sales tax increase.

LePage said opponents of the plan were unable to comprehend it.

“My budget proposal was widely acknowledged as a bold and comprehensive plan to modernize, reform and restructure how Maine does business. Unfortunately, it proved too big a concept for some of the small minds in the Legislature to grasp,” LePage wrote.

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The budget passed by lawmakers would provide $135.4 million in tax cuts by 2017. The Democrat-controlled House voted 105-42 to approve the deal. The Republican-controlled Senate voted 31-4 to ratify it, but stripped out a provision that would determine whether some asylum seekers can receive General Assistance. The decision prompted many members of the Portland delegation to vote against the budget.

The spending plan includes an income tax cut paid for with changes to the sales, meals and lodging taxes. The current 5.5 percent sales tax is scheduled to decrease to 5 percent Wednesday. The budget deal would keep the tax at 5.5 percent to help fund the income tax cut, which would be phased in over the next two fiscal years.

Meals and lodging taxes would increase. The current 8 percent meals tax is scheduled to fall to 7 percent Wednesday. The budget deal would maintain the 8 percent tax for both meals and lodging until Dec. 31, then increase the lodging tax to 9 percent on Jan. 1, to capture more revenue from tourists.

Maine income tax brackets also would change under the compromise.

Under current law, the top marginal income tax rate is 7.95 percent for people earning $20,900 or more per year, 6.5 percent for people earning $5,200 to $20,899, and 0 percent for people earning up to $5,199.

The budget agreement would lower the top rate to 7.15 percent for a single filer in 2016 and raise the income threshold to $37,501 and higher. Those earning $21,051 to $37,500 would pay 6.75 percent, and those earning $0 to $21,050 would pay 5.8 percent.

Democrats said that under the revised tax structure, many Mainers earning up to $5,200 would have to start filing income tax forms to receive the full tax cuts.

The tax brackets would change in 2017, but the rates would remain the same. The top rate would kick in for those earning $50,001 or more, while the middle rate would cover those earning from $21,400 to $50,000. The income threshold for the bottom rate would remain the same.

The budget also would eliminate the income tax on military pensions, and increase the current homestead property tax exemption from $10,000 to $15,000 in 2016.

 


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