AUGUSTA, Maine — A key committee approved a two-year state budget proposal Friday that includes sales, meals and lodging tax increases, something that would prevent what many lawmakers see as painful rises in local property taxes.
But the proposal drew a veto promise from Gov. Paul LePage, while fellow Republican leaders expressed dissatisfaction with the legislation approved with bipartisan support in the Appropriations Committee. Among other changes, the roughly $6 billion budget would temporarily increase Maine's 5 percent sales tax a half-cent and temporarily raise the meals and lodging tax from 7 to 8 percent.
The increases would avert steep property tax increases that would result from a two-year suspension of revenue-sharing to Maine municipalities, which LePage had proposed in his original budget, committee members say.
"Six months ago, we all agreed that we had an uphill battle to solve the state's budget challenge," Sen. Dawn Hill, co-chair of the Appropriations Committee, said in a statement. "We checked our politics at the door and came up with a solution that we can all live with."
Hill, D-York, said the budget proposal is responsible and prevents large property tax increases that would have resulted from revenue sharing cuts. The bill is to be debated in the House and Senate next week.
In his weekly radio address, LePage said, "I will veto any budget that raises your tax rates. I don't see it as politics. I see it as good public policy, and good public policy is good politics. I am not worried about the next election. I'm worried about the next generation."
The Senate's top Republican, Mike Thibodeau of Winterport, left little hope the proposal would draw broad support within his party. Republican votes would be needed to override a gubernatorial veto should LePage, who strongly opposes any tax increases, rejects it.
"While I appreciate all of the hard work and thoughtful consideration by the Appropriations Committee, I am disappointed, but not surprised, by the tax increases that are included in this proposed budget," Thibodeau said in a statement. "We were so close to finding ways to make state government live within its means. Instead, we are once again choosing to turn to Maine taxpayers to ask them for more of their paychecks to fund government programs."
The sales tax increase would generate an additional $134 million over two years, while the increase in meals and lodging taxes would generate $44 million. Both of the new taxes would kick in Oct. 1.
The bulk of the new revenues would restore $125 million to revenue sharing, about two-thirds of what the towns and cities have been receiving, according to figures provided to the committee.
In addition, the budget would replace the Circuitbreaker property tax relief program with a new Tax Credit Fairness program, targeted more toward low-income earners. The budget also seeks to restore funding to Head Start and Drugs for the Elderly programs.