AUGUSTA, Maine — For the last five months, the great unknown in the Maine Legislature has been whether Republicans would coalesce around the sweeping tax reform elements of Gov. Paul LePage's budget proposal, or whether they would try blaze their own path.
That question was answered Friday.
As the GOP budget plan was unveiled at the State House, Maine Senate President Mike Thibodeau told reporters that the Republican legislative tax proposal brings to the table a number of welcome changes, including a break for taxpayers.
"It offers $380 million dollars in income tax relief," Thibodeau says.
The Republican plan proposes a realignment of individual income tax brackets. For those making $50,000, the tax rate would be 6.5. That's down from the current rate of 7.95 but not as low as the governor's proposed 5.75 percent.
The plan also retains municipal revenue sharing funds that LePage wants to eliminate and keeps the popular Homestead Property Tax Exemption program instead for everyone, and not just for homeowners over the age of 65, as the governor has proposed.
Most importantly, House Republican Leader Ken Fredette says the GOP plan rejects LePage's recommended expansion of the sales tax and would also keep the sales tax rate at 5.5 percent.
"Obviously that was due to sunset," Fredette says. "I think keeping it where it's at is sort of a trade-off for income tax reduction, I think the governor has started that conversation and I think it's appropriate at this point and time because we want hard-working Mainers to be able to keep more money in their pocket."
And while the plan raises the meals and lodging tax to 9 percent over the current 8 percent, the GOP proposal also retains elements of LePage's original measure, such as conforming the estate tax to the federal exemption rate and exempting military pensions from the state income tax.
Thibodeau says there's still a lot for the governor to like in the GOP proposal.
"I think the governor, when he reads the proposal, will be excited about what he sees," Thibodeau says. "I mean, he's looking for income tax relief and this is exactly what this offers."
Democratic House Speaker Mark Eves says his party wants to see more about exactly how the Republicans plan to pay for their $380 million dollars in tax cuts.
"At first glance, some of the concerns we have around the proposal is we don't know how it's paid for," Eves said.
He's also concerned about the re-alignments of the tax brackets, which he says hint of trickle-down economics that provide the greatest amount of relief to the wealthiest taxpayers.
But there are also elements of the GOP plan that Eves says Democrats can support.
"I do think there's a path forward for both sides," Eves says. "We were hoping that the Republicans would come out with a proposal so that we could in good faith negotiate. The governor came out with his proposal. We came out with our better deal for Maine in April and now the Republicans in the Legislature have their own plan and I think that is a good indication that we're going to sit down and try to hammer something out."
The Appropriations Committee took up the measure late Friday afternoon, and leaders say they hope to have a budget out of the committee by Memorial Day.