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Republicans vote to raid rainy day fund
April 5, 2012
AUGUSTA – A TABOR-like measure that raids Maine’s rainy day fund to provide tax cuts to the wealthiest Maine people passed the Maine House of Representatives by a narrow party-line vote of 74-71.
Democrats fought against what they described as irresponsible and unfair proposal, which failed in the House in a vote late last month. A new version of the bill, which was amended last week in the Senate, passed the House late this afternoon.
“Maine has rejected TABOR measures like this one three times before by increasing margins,” said Rep. Seth Berry, D-Bowdoinham. “Republicans have now voted against the will of the Maine people and that fact will not be lost in November.”
An analysis by Maine Revenue Services shows the Republican TABOR bill, would give an average tax reduction of only $1 to the bottom 20 percent of income earners. Meanwhile, the tax cut would give an average reduction of over $21,000 to the wealthiest 1 percent of Maine residents.
Berry added, “This attempt to resurrect TABOR is fiscally irresponsible, unfair to the middle class, and hurts property tax payers and schools.”
The bill, LD 849, would ratchet down state revenues by gradually lowering Maine’s income tax rates to a flat 4 percent, with 75 percent of the benefit going to the top 20 percent of taxpayers. The bill would reduce the state income tax revenue by $600 million per year.
The amended proposal uses 20 percent instead of 40 percent as originally proposed, of one-time surpluses that would typically be put in the state’s “rainy day” fund to make permanent cuts without paying for them in future years. The surplus only pays for the cuts in the first year.
In a floor speech during tonight’s debate, Rep. Bob Duchesne, D-Hudson, who was critical in winning over Republicans in the prior House vote said the amended proposal was “just haggling.”
“Last week, the House declined to abandon fiscal responsibility and financial prudence by skimming 40% of the money intended for the Rainy Day Fund and long term obligations,” said Duchesne. “We wouldn’t compromise our principles for 40%...I say we hold out until they throw in a toaster oven.”
According to the nonpartisan fiscal office of the Maine Legislature, full implementation of LD 849 as written would cause losses to Maine schools, roads, bridges, and towns totaling over $1.2 billion per biennium.
“The whole point of this bill is to trigger budget crises in the future, putting the squeeze on the Appropriations Committee,” said Duchesne. “In each one of those crises, they’re not going to find it any easier to cut vital services than we have. Even if it passes, LD 849 will have the statutory shelf life of a ripe banana. Dead bill walking.”
The bill faces more votes in the House and Senate and also in the Appropriations and Financial Affairs Committee.
Contact:
Jodi Quintero [Berry, Duchesne] 287-1488, c. 841-6279