Gov. Janet Mills could soon face a showdown with members of her own party over whether to increase taxes on the wealthy and corporations. And her course of action will likely reverberate throughout the race for U.S. Senate.

Democrats on the Taxation Committee are recommending the inclusion in the supplemental budget of three tax bills that have already passed in at least one chamber, urging appropriators to “focus on proposals that generate revenue through fair taxation to fund essential services that help Maine families thrive.”

The bills have faced resistance from Mills in the past. And a handful of Democrats last year initially voted against the two-year budget because because none of the bills was included.

The bills recommended by committee Democrats would bolster education funding by adding a 2% surtax on incomes over $1 million and fund various agricultural programs by adding a 1.07% surtax on corporations with incomes over $3.5 million. Those bills would generate an estimated $64 million and $43 million, respectively, in additional revenue the next budget year.

A third bill would change existing income tax brackets, resulting in an estimated $77.6 million in additional revenue next budget year.

It’s unclear whether there will be wide support for higher taxes among lawmakers, who have made affordability a centerpiece of this legislative session. All three bills were supported by Senate President Mattie Daughtry, D-Brunswick, and House Speaker Ryan Fecteau, D-Biddeford.

“I have been a longtime supporter of unrigging the (former Republican Gov. Paul) LePage tax code, which benefits the wealthy,” Fecteau said in a written statement.

House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, has repeatedly called for tax cuts throughout Mills’ tenure and opposes the bills.

“Democrats continue to prove they are economically illiterate,” Faulkingham said. “Maine has some of the highest taxes, combined with the highest energy costs in the country, which doesn’t leave enough money in people’s pockets to drive the economy.”

Sen. Bruce Bickford, R-Auburn, criticized the bills, saying they would increase taxes by more than $250 million over the next two years.

“This just doesn’t add up,” Bickford said. “It’s just not sustainable.”

Conditions may be ripening to push those bills across the finish line this session, with state revenues declining after years of surpluses, Democrats controlling both legislative chambers and a term-limited Democratic governor running in the primary for U.S. Senate.

Nonpartisan forecasters recently reduced their revenue prediction for the next biennium by nearly $85 million. That’s a drop of more than 50% of the previously predicted increase of nearly $168 million for the 2028-29 fiscal years.

And Mills is locked in a contentious Democratic primary against political newcomer Graham Platner, who has repeatedly called for higher taxes on the wealthy and taking on corporate influence.

Platner endorsed state proposals for a millionaire’s tax and for reforming the state’s tax brackets to include higher rates for wealthier households at a “Tax the Rich” rally with state lawmakers in South Portland in January.

Mills has opposed similar efforts in the past, including a less ambitious tax reform bill she vetoed in 2024 that would have provided tax relief to low-income families while shifting the burden to higher incomes. She said at the time that the bill didn’t get enough public attention.

Last year, Mills explicitly ruled out any broad-based tax reforms, including higher income taxes or ending business incentive programs, in her State of the Budget address.

“I know there is a strong desire among some of you to just ‘tax the rich’ or ‘end corporate welfare,’ Mills said last year. “I hear you. But I have opposed changing our tax rates, much to the dismay of my Democratic friends, because stability and predictability, for our people and for entrepreneurs and investors looking at Maine, cannot be overstated.”

Instead, lawmakers approved Mills’ targeted tax increases, including increasing the tobacco tax and making streaming services subject to the sales tax.

But that proposal led to a brief mutiny in the House, where Democrats hold a razor-thin majority. Six Democrats initially voted against the budget because the proposed taxes would disproportionately affect low-income Mainers. But the budget finally cleared the lower chamber by a single vote.

This year, however, Mills was silent on the issue in her State of the State address, while also proposing to tap into the state’s roughly $1 billion budget stabilization — or rainy day — fund for the first time. She wants to use about $219 million to provide $300 checks to taxpayers, plus another $100 million for one-time initiatives.

Mills’ aides did not respond to questions Wednesday about whether the governor’s opposition to broad-based tax reform has softened.

Lawmakers on the Appropriations and Financial Affairs Committee are currently reviewing and voting on individual parts of the supplemental budget ahead of their statutory adjournment on April 15.