Gov. Paul LePage used his annual State of the State address to urge lawmakers to approve his $6.8 billion budget and to alter what he sees as flaws in two laws passed by voters in November.
The governor used the address, his seventh since taking office in 2011, to reiterate his oft-repeated agenda of cutting the state income tax, reducing energy costs and to advocate for a budget that includes sweeping changes to the state’s education funding formula and tax system. He did so by repeatedly blasting “liberal” lawmakers and interest groups, who he asserted were trying to “transform our state into a socialist utopia.”
LePage also continued to target two citizen-initiated laws ratified by voters in November. He blasted Question 2 on last year’s ballot, which added a 3 percent surcharge to Mainers making over $200,000 a year to pay for increased education funding. He also criticized Question 4, which increases the state’s minimum wage.
Although voters approved both ballot initiatives, LePage said they were duped into supporting destructive changes that will raise prices for the elderly and those on fixed incomes and drive out businesses and high earners.
“Our citizens voted to raise the minimum wage. They also voted to ‘tax the rich.’ I get it. But they did not read the legislation behind the ballot questions,” he said, according to a copy of his prepared remarks. “They didn’t know it would destroy our fragile economy.”
Despite vetoing a minimum wage bill prior to last year’s referendum, LePage said he didn’t object to raising the base wage.
“But I would rather talk about career wages,” he said. “Liberals always aim low — they want to raise the starter wage.”
Senate minority leader Troy Jackson, D-Allagash, said voters supported the minimum wage increase because LePage and Republicans repeatedly blocked other attempts.
"We had bill after bill to raise the minimum wage, not up to $12, but just 50 cents. And time and time again the Republicans blocked it. This governor vetoed it. So I can't look at the voters and say, 'You've done something wrong.' They know very well ... don't act like they're stupid," Jackson said.
The governor also mounted a defense of his budget, a spending plan that reflects his desire to hold the line in state spending, while slashing 500 state government jobs and broadening the state’s sales tax to help pay for a steep cut in the income tax.
The governor’s budget also attempts to reverse the effects of the 3 percent surcharge from Question 2. It delays the implementation of the referendum for one year, while phasing in new reductions of the income tax.
His budget reduces the state’s tax brackets from three to two over the next two years. During that time, the surcharge to pay for education funding would be paid for by Maine’s highest and lowest earners — a sharp departure from the referendum approved by voters, which put the burden on high earners.
“Taxing them (the wealthy) out of Maine does not help our economy, it harms it,” LePage said.
The governor’s budget has received a mixed response from the Legislature, which can change the two-year spending plan and likely will.
Prior to Tuesday’s address, the governor sent mixed signals about his willingness to negotiate with lawmakers. He has repeatedly called the Legislature “irrelevant,” but has also taken the unusual step of testifying before the Legislature’s budget writing committee to advocate for his budget — his final as governor.
Tuesday’s address also marked the governor’s return to a forum that he essentially abandoned last year. A year ago, LePage broke with tradition by skipping the speech and sending a letter instead.
In a move that exemplifies his tense relationship with lawmakers, LePage last year called lawmakers “socialists” over a dozen times in his letter and blamed them for not moving the state in his preferred direction.
LePage’s new sales tax broadening, described in his budget as “modernizing,” applies the 5.5 percent sales tax to services such as haircuts, recreational purchases such as golf and skiing and professional services, including landscaping and snow removal.
By 2020, LePage envisions a flat tax of 5.75 percent, factoring in the 3 percent education funding surcharge approved by voters.
While Republican lawmakers support the governor's efforts to cut the income tax, his previous attempt to broaden the sales tax stalled in the GOP-controlled Senate. Republican Senate leader Garrett Mason said Tuesday that the broadening of the sales tax is still a point of contention.
"You know that's always been a sticking point for us," he said. "There's been a big diversion of opinion about how best to collect sales tax revenue. That's a debate that we've had, it seems like a perennial debate that we've had probably since about 2009."
Democrats, who control the House, are also reluctant to support sales tax broadening. Their reticence stems from a similar effort in 2009 that was eventually overturned by voters and used against them by the Maine Republican Party.
LePage is also proposing an increase in the lodging tax, from 9 percent to 10 percent; allowing towns to tax nonprofits with properties of $10 million or more; eliminating the state formula to fund local school administration and encouraging district consolidation with a $11 million fund to pay for it; offering zero-interest student loans to students attending the University of Maine and the Maine Maritime Academy; and cutting eligibility for MaineCare health coverage for parents who are able to work and who currently earn over 40 percent than the federal poverty level.
