Governor asks departments to identify potential Federal funding that may be able to maintain balanced budget & adopt Federal tax treatment of PPP loans
Governor Janet Mills announced today that she has asked her departments to explore whether Federal funding may exist to help Maine provide the same beneficial tax treatment to PPP funds that the Federal government has.
“I am proud of the hundreds of small businesses across the state who used the PPP funds to keep people employed, to keep their doors open, and to keep our economy afloat during a time of extraordinary financial distress. The Federal government recognized the value of their efforts when, in late December, it declared that it would provide a double tax benefit on proceeds appropriately spent. Unfortunately, at that time, it did not also offer compensation to the states for the loss of that tax revenue.
“My approach as Governor has always been to solve problems. The proposal we have introduced is a starting point, and there is more work to be done. Now, with the Biden Administration in place, I am asking my departments to take a fresh look at whether there may be any newly-available Federal funds that would allow Maine to maintain our balanced budget and adopt the same additional benefit the Federal government is offering to the numerous entities that received PPP.
“I want to work with the Legislature and others to do all we can to pursue solutions that will help small businesses through this time of extraordinary hardship.”
The Administration has proposed maintaining standard treatment of PPP so no Maine business owes State taxes on funds spent to keep employees on payroll or on other deductible expenses such as rent or utilities. The Administration would prefer to conform to the Federal government’s double benefit of treating these PPP funds as nontaxable and allowing the related expense as deductions, but, at an estimated cost of $100 million, was not able to do so and still balance the budget, particularly without additional Federal aid to the states such as that which Congress recently rejected.
The Governor has asked her departments to undertake a review immediately and expeditiously to determine whether there are any newly-available Federal funds that could be tapped in order to help businesses’ bottom lines and preserve a carefully balanced budget.