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Prospects for tax cuts look even bleaker following Janet Mills' revised budget proposal

Maine Gov. Janet Mills speaks at a news conference, Jan. 17, 2023, in Augusta, Maine.
Robert F. Bukaty
AP file
Maine Gov. Janet Mills speaks at a news conference, Jan. 17, 2023, in Augusta, Maine.

Gov. Janet Mills’ latest budget proposal contains hundreds of millions of dollars for housing programs, emergency medical services, schools, workforce training and other initiatives that often enjoy bipartisan backing.

But there are no proposed tax cuts in the governor’s proposal — and the omission, while not surprising, isn’t sitting well with Republican leaders in the Legislature.

“We don’t find the Governor’s change package responsive to the times, or responsive to the needs of the Maine people,” Republicans said this week.

Tax revenues continue to flow into Maine’s coffers at higher-than-anticipated rates despite persistent inflation and rumblings of a looming recession. As a result, Mills and the Legislature’s budget-writing committee expect to have an additional $233 million on hand for the fiscal year that ends on June 30 and another $71 million available during the two-year budget cycle that begins on July 1.

The nitty gritty details of Mills’ budget “change package” aren’t available yet. But much of the spending is on one-time, rather than ongoing, initiatives. Highlights include $35 million to expand affordable housing in rural areas, $12 million in funding for emergency housing programs, $31 million for grants to Maine’s struggling EMS programs, $4 million to double the state’s child care tax credit and $50 million for no-interest loans for school renovations and repairs.

Republicans have been pushing for months to tap some of the surplus for tax cuts, most recently suggesting $400 million in income tax cuts for lower- and middle-income families. Those already-dim prospects now appear rather bleak.

House Minority Leader Rep. Billy Bob Faulkingham, R-Winter Harbor, said he is still waiting to see those details but, overall, he “was unimpressed with the amount of money that was spent without tax relief.”

“We are going to keep pushing for low and middle-income people, we are going to keep pushing to support retirees on their pensions,” Faulkingham said. “There is a lot of stuff that we don’t like about it. But there is some good stuff in there. I was glad to see it was mostly one-time spending, although I am concerned about how much that has increased over the last (budget).”

Democrats control both chambers of the Legislature, however. And Senate President Troy Jackson was pretty blunt when asked about potential tax cuts on Thursday.

“There’s no reason to string people along on this: I would say no,” Jackson said.

The Allagash Democrat said lawmakers from both parties are talking about Maine’s affordable housing crisis, the need for more affordable child care and the challenges faced by EMS providers.

“I mean, the business community across the state has not come to me and asked for income tax cuts. They have asked for workers and employees,” Jackson said. “And you get that by helping them with housing and you get that by helping them with child care. That is what we should work on as priorities, Republicans and Democrats.”

Democrats in the Legislature pushed through a roughly $9.9 billion budget earlier this spring for the next two fiscal years, removing the prospect of a government shutdown on July 1. They did it without Republican support, breaking with the normal, bipartisan budgeting process that typically stretches into mid-June. That angered Republicans, who now have less leverage to bargain for tax cuts in the budget change package — but also arguably less incentive to negotiate with Democrats on other initiatives important to the majority party.

A billionaire-backed conservative group with Maine ties

A Florida group recently in the national spotlight for pushing to loosen child labor laws and tighten voting restrictions in state houses across the U.S. has extensive connections to Maine and has had an active lobbying presence in the legislature.

This week the Opportunity Solutions Project, an offshoot of the Foundation for Government Accountability, testified in support of a bill sponsored by Senate Minority Leader Trey Stewart, R-Presque Isle, that would ban “private funding of elections.” The proposal is modeled after similar ones pushed by OPS in other states and recently highlighted in a report by the New York Times.

The bill focuses on grants provided to municipalities during the pandemic to help administer elections by a nonprofit partially financed by Facebook creator Mark Zuckerberg, The Center for Tech and Civic Life. Supporters,including OPS, insinuated that the grants were used to drive Democratic voters to the polls in 2020 because of Zuckerberg’s prolific donations to Democratic candidates.

The assertion, made by OPS and FGA fellow Madeline Malisa, a former staffer for Republican Gov. Paul LePage, was sharply contested by Democratic Secretary of State Shenna Bellows. Bellows noted that more than 200 Maine towns received funding from the Center for Tech and Civic Life and used the money solely for the purpose of election administration.

“I want to be clear. Our clerks never engage in get-out-the-vote activities,” Bellows said. “Our clerks are in the business of administering elections. That’s what they do. That’s what those funds were used for.”

Bellows went on to list the uses of the funds received in 2020, according to municipal clerks. Some reported using the funds to pay for new filing cabinets, postage or security guards.

The bill is unlikely to get far in the Democratic-controlled Maine Legislature, but FGA and OPS have had success advancing similar legislation in Republican-led states. The groups are also behind legislation either repealing or prohibiting the use of ranked-choice voting in elections; Malisa previously testified in support of a bill that would repeal Maine’s ranked-choice voting law enacted by voters in 2016.

The Times report focused on how FGA, OPS, the Honest Elections Project and Election Transparency Initiative are pushing election and voting restrictions as part of an advocacy network funded by conservative billionaires. FGA, for example, has received funding from the 85 Fund, a nonprofit associated with Leonard Leo. Leo, who owns a home in Bar Harbor, is largely credited with reshaping the U.S. Supreme Court with conservative justices via the Federalist Society, a success he hopes to broaden in other political and cultural areas. The Times reported that FGA has also received funding from the Election Transparency Initiative, which is backed by shipping magnate and GOP megadonor Richard Uihlein — the primary funder of a failed effort to bar noncitizens from voting in local elections in Maine.

While the FGA is based in Florida, its leadership has deep connections to Maine politics. Its CEO, Tarren Bragdon, once led the Maine Heritage Policy Center — now known as the Maine Policy Institute — and he helped shape LePage’s cabinet in 2011. The organization also landed influential positions in the Department of Education, Department of Health and Human Services and as advisors to LePage.

The FGA and the Maine Policy Institute are both members of the State Policy Network, a federation of conservative advocacy groups.

Solar energy group vs. Public Advocate

A subsidy program designed to promote the expansion of solar energy in Maine has put Public Advocate William Harwood in the crosshairs of the industry.

Harwood has increased his calls to overhaul the subsidy program, known as net energy billing, and return it to what was before the Legislature passed a 2019 law that expanded it and is largely seen as fueling Maine’s solar boom.

Harwood argues that the program is becoming too costly to electricity ratepayers. In a recent column in the Portland Press Herald and then again Thursday during a State House press conference, Harwood said net energy billing could soon cost ratepayers roughly $220 million per year. And he estimates that could cost Central Maine Power and Versant ratepayers about $275 per year each over 20 years.

The solar industry has pushed back hard on those estimates, calling them inflated and accusing Harwood of spreading “misinformation” on behalf of CMP and Versant.

“The people of Maine deserve the truth about the critical decisions our public officials are making," said Kate Daniel, northeast director of Coalition for Community Solar Access, in a press statement earlier this week. "Unfortunately, the (Public Advocate) has chosen to paint an incorrect picture of the NEB program by cherry-picking exaggerated utility claims and ignoring real data that show how beneficial this program is to Maine ratepayers.”

Harwood stood by the figures on Thursday and called the program deeply flawed.

“This program isn’t a good program and it’s nothing that Maine state government should be proud of,” he told reporters. “We don’t need to blame who was at fault. We need to fix it.”

The conflict continued Thursday when Harwood held a press conference at the State House to urge legislators to overhaul the program.

It’s unclear whether Democrats who control the legislature will heed Harwood’s call, but the dispute is part of a national trend in states that utilize net energy billing subsidies to promote solar development.

Last year, California regulators cut their subsidy program to ease its rate impact, a decision that prompted environmental groups to sue the state. And regulators in Massachusetts, whose program inspired net energy billing in Maine, have also adjusted their criteria.

A similar move in Maine may bring on a similar result.

Maine's Political Pulse was written this week by State House correspondent Kevin Miller and chief political correspondent Steve Mistler, and produced by digital editor Andrew Catalina. Read past editions or listen to the Political Pulse podcast at mainepublic.org/pulse.

Journalist Steve Mistler is Maine Public’s chief politics and government correspondent. He is based at the State House.