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Maine Tax Conformity Ensnared by Education Spending Debate

What started as a straightforward debate over whether Maine should conform its tax policies to those passed by Congress in December has now become more complicated.

Tax conformity has now also become tied to school funding.

Gov. Paul LePage proposed that Maine adopt federal tax law changes in what has been a routine piece of legislation every session. But at the same time that lawmakers were considering that measure, which would cost around $38 million over two years, they discovered that school subsidies would go down by about $23 million this year because of changing enrollments.

House Democrats proposed tying the two issues together, and as a result have proposed additional funding to local school districts.

The Maine Education Association brought teachers and students to the State House to lobby in favor of additional subsidies.

“For years I have seen my students suffer without the resources that they need,” says Patty Scully, a teacher at the Winslow Elementary School. “Our textbooks date back to the 1980s but our standards gave changed immensely, and it makes it much more difficult to link those pieces together for our students.”

Malachi Willy from Caribou is in the 7th grade and says lawmakers should listen to what his generation has to say about the needs of schools.

“I feel like the people who make decisions about my education should really know what my school is like,” he says. “We need new textbooks. Mine are literally falling apart.”

But the effort to tie additional school funding to tax conformity has drawn significant opposition. In his weekly radio address, Gov. Paul LePage flatly rejected the idea.

“The $23 million would be a windfall for state education spending, which has already increased by $80 million over the last budget,” LePage says. “Over the past decade, enrollment in Maine decreased by 25,000 students. Although the number of students has declined by 13 percent, spending has increased by 18 percent.”

Nonetheless, legislative leaders are talking about a compromise bill that would address both issues. House Speaker Mark Eves, a Democrat, says there is broad support for reaching a compromise that can garner enough votes to withstand an expected veto by the governor.

“We are not there yet, but we are certainly working on getting there,” Eves says. “Again, our schools have a funding gap and we need to make sure that we address that for our kids’ classrooms and for property taxpayers. We cannot sit by and watch property taxes go up.”

Senate President Mike Thibodeau, a Republican, says talks have been underway off and on for a week to see whether a bipartisan agreement can be reached. But as of right now, he says, there is no agreement.

“There will be a lot of discussion around additional funding for our local schools. That’s appropriate,” Thibodeau says. “I don’t know that we have to tie the two issues together. But, we are obviously looking for a pathway forward.”

Both Thibodeau and Eves say they want to resolve the issue as soon as possible so those Mainers who are waiting to file their taxes can do so. Still up in the air are business tax breaks that would apply to 2015 taxes, such as deprecation of equipment investments, and deductions for teachers who buy classroom supplies out of their own pockets.

Journalist Mal Leary spearheads Maine Public's news coverage of politics and government and is based at the State House.