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Rep. Meredith Strang Burgess
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For Immediate Release

Date: 11/14/11

Legislature lays groundwork for stronger economy

By Rep. Meredith Strang Burgess

On October 31, legislative leaders voted on roughly 300 bills that had been submitted for consideration during the Second Regular Session. The only new bills accepted, generally speaking, are those dealing with budget issues and emergencies. The Legislative Council approved 125 bills, which will be added to 120 carry-over bills set for deliberation next year.

Before that session gets underway, allow me to recap the highlights of the First Regular Session.

A year ago, voters made it clear that jobs and the economy topped their list of concerns, and the new Republican majorities in the House and Senate mapped out a strategy to help improve the conditions. Government cannot create jobs, but it can establish a more positive business climate. The following initiatives will move Maine toward a better future.

HEALTH INSURANCE REFORM: Our insurance rates are among the highest in the country. Employers, employees and individuals are stretched to the limit - and beyond. LD 1333, the sweeping overhaul that is now law, will put us back in the American mainstream with more competition, more choices and a more rational rating structure. The goal is to drive down costs and make insurance more affordable for everyone.

For individuals with expensive or chronic conditions, a guaranteed access plan will assure they can get insurance at reasonable rates thanks to a new subsidy program. Small businesses are now permitted to form an association captive insurance company to obtain better rates for their workers, and beginning in 2014 Mainers will be able to shop for insurance across state lines.

We are seeing early evidence that renewal rates for some businesses are coming in lower than expected. That's encouraging, but this is certainly a work in progress and problems will be addressed when they appear.

PENSION REFORM: The new budget includes changes to the public pension system that will save Maine taxpayers billions of dollars over the next 17 years while enhancing the system's long-term stability. The budget freezes state employees' pay for the next two years, thus impacting pension benefits, which are based on earnings. It also caps cost-of-living increases at 3 percent annually instead of the previous 4 percent. The retirement age has been raised to 65 for new hires and employees not yet vested. However, no retiree benefits were cut, and employees' costs did not go up.

These structural changes will reduce the unfunded liability from $4.1 billion to $2.5 billion. When factored for future inflation, the total payments to retire the debt drop from $9.63 billion to $6.47 billion - an estimated savings of $3.15 billion between now and 2028, the constitutional deadline to get the whole debt paid off. Over the next two years alone, these changes will save taxpayers about $334 million. Moving forward, I expect that some changes will be proposed to new and current employee pension plans.

TAX CUTS: The budget for 2012-2013 includes the largest tax cut in Maine's history - $150.7 million. This reduction offers middle-income Maine families real financial relief and provides economic stimulus by increasing disposable income. The package also eliminates the state's Alternative Minimum Tax and the 7 percent tax on meals served at retirement facilities. It allows for a refund on sales tax on fuel for commercial fishing boats and fully restores the Business Equipment Tax Reimbursement program, which will encourage businesses to invest in capital equipment.

The estate tax exclusion has been increased from $1 million to $2 million. Fewer family farms and businesses will have to be broken up and sold off to cover "death taxes." Due to tax bracket changes and a higher personal exemption, some 70,000 low-income filers will pay no state income tax. Overall, virtually every tax filer will see a reduction in their income taxes.

REGULATORY REFORM: Maine's aggressive regulatory bureaucracy has been one of the most serious impediments to the success and survival of businesses. Last December, new legislative leaders took up the cause of regulatory reform with LD 1, "An Act To Ensure Regulatory Fairness and Reform."

That marked the beginning of a new attitude in Augusta. In meetings throughout the state, a bipartisan committee of legislators met with business owners, workers, farmers, fishermen and entrepreneurs who put their fortunes on the line to make a better life.

The resulting legislation, now in statute, eliminates numerous bureaucratic obstructions to doing business in Maine, striking a balance between reasonable safeguards and allowing free enterprise to flourish. Changes include commonsense reforms to the Department of Environmental Protection and new business liaisons to help job-creators navigate the maze of permitting agencies.

All told, this was a high-impact legislative session that will make a difference to Maine's economic future. Our work is not done, however.

Over the upcoming session, we will continue to make difficult financial decisions in all areas of the state budget. I would urge you to be watchful of the conversations in Augusta, and please take the time to contact your own representative and senator. We really do want to hear from you regarding the issues and the impact the various policy changes will have on families, businesses and municipalities. I can be reached at ###

State Rep. Meredith Strang Burgess (R-Cumberland) co-chairs the Health and Human Services Committee

Jay Finegan
Maine House Republicans
Tel: (207) 287-1445