My goal in writing these columns is to tell you things you didn’t already know without being so boring that it makes your hair hurt. This particular column was more of a challenge because of the topic, but I bet when you finish reading this you’ll say, “Very interesting. I didn’t know that!”
By now we all know that the Legislature has adjourned after finally passing a bipartisan state budget and did so by a “super majority” vote (passed with at least two-thirds of the members). Then Gov. LePage vetoed the budget. However, a significant number of Republicans, Democrats and independents, again with a super majority vote, disagreed with LePage. The two-year budget became law July 1, 2013 extending through June 30, 2015.
In spite of the political spin and posturing for the next election by some legislators and the governor, many lawmakers on both sides of the aisle felt it was a relatively fair budget. They also knew the reality that supporting LePage’s veto would have resulted in a government shutdown, causing an economic disaster for everyone, especially small businesses – a risky move for legislators. Besides, there are some good things in this budget.
Most people don’t have the time or inclination to browse through a state budget or are lonely and desperate enough to actually read such a document. Having chaired the legislative budget-writing committee in the past, I’m just weird enough to have read this new budget and in doing so found some things that may be very interesting.
Here are a few examples.
There will be a temporary half-penny increase in the sales tax from 5 percent to 51?2 percent, but won’t take effect until Oct. 1, 2013. It then goes back to 5 percent July 1, 2015. So, purchasing an item at the local hardware store for $25 will mean a sales tax increase of 13 cents. Buying a $20,000 vehicle will result in a sales tax increase from $1,000 to $1,100.
The tax rate on meals and lodging will temporarily increase from 7 percent to 8 percent, also taking effect Oct. 1, and ending June 30, 2015. That means a $100 hotel room would be taxed $8, as opposed to the current $7. Enjoying a meal at a local restaurant will mean a slight increase, as well. For example, a $30 meal will be taxed $2.40 as opposed to the current $2.10.
These new revenues, along with others in the budget, provided the necessary funds to restore a variety of unacceptable cuts proposed by LePage, including his attempt to eliminate all revenue sharing to local towns and cities for two years. Local officials warned that losing revenue sharing would result in higher local property taxes. Republicans and Democrats agreed and restored two-thirds of the funds in the final budget.
The budget also provides an additional $32 million to the cost of local education, again helping to keep local property taxes under control. Another important budget line restored $14 million to the Elderly Low-Cost Drug Program that was marked for elimination by LePage. Many senior citizens will be relieved to know this program was not canceled.
And, check this out. A fugitive from justice will no longer be eligible for General Assistance as a result of this budget. Who knew?
A little-known expenditure in the document that might cause heartburn with some people – me included – is funding a feasibility study to see if we need a new prison in Windham. Cost of the study? $250,000. Hmmm. Keep an eye on this, because initial reports indicated a new prison would cost $100 million. One wonders how many schools could be renovated for $100 million.
The Homestead Exemption program provides local property tax relief to hundreds of thousands of Maine residents. The governor proposed limiting this property tax relief to only those 65 years of age and older. This would have meant higher property taxes for most Maine homeowners. Once again, legislators rejected LePage’s idea and restored the full $10,000 Homestead Exemption.
This is another example of where new revenues from the temporary half-penny sales tax and 1 percent increase in meals and lodging were used. Trading those minor tax increases to keep property taxes lower was the goal of most legislators.
The popular circuit-breaker property tax relief program was replaced with the Property Tax Fairness Program. Persons under the age of 70 who qualify can get a tax credit up to $300 ($400 credit for those over age 70). In both cases, the average household income cannot exceed $40,000 – down from $87,000 last year.
Finally, Maine dairy farmers got a boost from the budget, as well. Some $3 million is provided to dairy farmers in need of assistance for the purchase of seed and other products based on hundred-weight of milk produced.
So, if your hair doesn’t hurt and you can say, “I didn’t know that!” – mission accomplished.
Bill Diamond of Windham served as District 12’s senator from 2004-2012, and is also a former Maine secretary of state.
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