Tax dreams

The Legislature passed 21 tax reduction bills this last session – with a total price tag of $237 million – that have been left in funding limbo, ranging from a tax break on prescription drugs for animals to loosening the rules on when non-residents have to pay income tax here.

Those bills got kicked back to the Appropriations Committee, which in the final hours of session couldn’t say yes – because the state had no extra money – but couldn’t say no either. In total there were 73 bills held over, including some non-tax, but big-ticket items, like fully funding the Homestead Exemption for $33 million. They are still alive until the committee decides what to do with them.

Statehouse observers say it’s a high number of carry-overs, largely due to the

Legislature’s frenetic pace at the end of session when they decided to redo $250 million of the state’s budget to eliminate an unpopular borrowing plan. To do that the Legislature raised taxes $1 a pack on cigarettes and hiked the tax on hard lemonade.

The price tag listed for the tax reduction bills is for the upcoming biennium. They include acts to:

• Create a grandparent-to-grandchild exemption in the real estate transfer tax for $6,000

• Exempt from the sales tax electricity used in homes for $4 million

• Increase eligibility for the property tax exemption for veterans for $6 million

• Lower the tax burden for small businesses and low-income families for $24 million

• Exempt military pensions for future military retirees from state income tax for $11 million

• Conform the Maine tax code with the federal health saving accounts laws for $1 million

• Change non-resident income tax filing requirements for $4 million

• Eliminate estate taxes on family-owned businesses for $22 million

• Exempt the United States flag and the flag of the state of Maine from state taxation for $900,000

• Repeal the “tax and match” tax on hospitals and nursing homes for $105 million

• Award income tax credits for boiler or furnace systems that reduce or eliminate certain pollutants for $42,000

• Make owners of cooperative housing eligible for the Homestead Exemption for $290,000

Bonds of secrecy

Democratic and Republican leaders have agreed on a bond package to present to the voters, but they’re not saying how much until they can talk to their respective caucuses. Whispers in the now-empty Statehouse halls put the number in the $80 million range late last week.

Both sides did confirm that the four big categories – transportation, economic development, conservation and education were in the mix, including money for Land for Maine’s Future.

In a joint statement, most notable for its lack of information, leadership characterized their negotiations as “productive” and “bipartisan.” Gov. John Baldacci had hoped for close to a $200 million package, while Republicans earlier this year said they would go no higher than $100 million.

The full Legislature is expected to be called in on July 29 to vote on the package. Party caucuses are scheduled for this coming Monday.