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Gov. Janet Mills vetoes income tax changes, clean energy workforce bills

Gov. Janet Mills speaks with a visitor in her office at the State House, Tuesday, Jan. 17, 2023, in Augusta, Maine.
Robert F. Bukaty
AP file
Gov. Janet Mills speaks with a visitor in her office at the State House, Tuesday, Jan. 17, 2023, in Augusta, Maine.

Gov. Janet Mills has vetoed two more bills: one dealing with income tax rates and the other with the workforce at a proposed offshore wind terminal on Sears Island.

In the final hours of this year's legislative session, lawmakers passed a little-noticed bill creating a higher tax bracket of 8.45% for Mainers earning at least $500,000 and married couples making $1 million. But the bill, LD 1231, also aimed to reduce income taxes on lower- and middle-income residents by allowing more people to qualify for the state's lowest tax rate of 5.8%.

In her veto letter, Mills described the bill as well-intentioned and said she supported the goal of reducing the tax burden on lower-income Mainers. But she said the way it moved through the Legislature "deprived the public of a meaningful opportunity to be heard."

Reiterating concerns raised by many people on this bill and multiple others this legislative session, Mills pointed out that the bill was originally introduced as a "concept draft" that contained no actual language. The eventual proposal did not become available until a committee work session was held.

"Fundamental changes to the state's income tax structure such as the one proposed in this bill should be made only following a transparent and deliberative process; they should not be made on a single, ad hoc basis near the end of a legislative session but, instead, as part of a larger, wholistic discussion about Maine's tax structure," Mills, a Democrat serving her second term, wrote in her letter to lawmakers.

Mills also estimated that fewer than 7,000 tax returns in the lowest bracket would benefit because of exemptions and other recent tax changes aimed at reducing the tax burden for lower- and middle-income residents. And she raised concerns that increasing Maine's highest tax rate of 7.15% — which is already the tenth highest in the country — would make state coffers even more dependent on a small number of wealthy individuals whose income may fluctuate considerably from year to year.

While Republicans have been pushing for years for lower income tax rates, progressive groups have been calling for higher taxes on the wealthiest Mainer residents. Garrett Martin, president and CEO of the left-leaning Maine Center for Economic Policy, called the veto a "missed" opportunity.

“While our state’s tax systems are already among the fairest in the nation, it’s also true that wealthy people and corporations continue to avoid paying their fair share, leaving those with the least to pick up the slack," Martin said in a statement on Friday. "LD 1231 wasn't a perfect tax bill — most of its benefits targeted upper middle-class households and no benefits were available for Mainers with the lowest incomes — but asking the wealthy to pay more was a step in the right direction."

The bill passed the Senate on a 20-13 vote and received a vote of 88-57 in the House. Both of those votes were largely along party lines and are smaller than the super-majority margins that would be needed to overturn her veto.

Mills described the second bill that she vetoed, LD 373, as "ambiguous and potentially more far-reaching than intended."

That measure would have required companies leasing state-owned land for a clean energy project to negotiate with unions looking to represent workers at the site. The bill was aimed at the controversial, offshore wind power terminal and manufacturing facility that the Mills administration wants to build in Searsport.

But Mills said it was unclear whether the bill applied only to construction jobs or to permanent positions as well, and suggested it could be required of other clean energy projects.

"On the second question, the language of the bill — while appearing to be targeted specifically towards an offshore wind port — could apply to the operation of any clean energy project, including biomass, hydroelectric, solar, wind and geothermal, that touches state land, which is far more expansive than the apparent intent of the bill," Mills wrote.

The bill passed the Senate on a vote of 21-12 but squeaked out of the House by a single vote.

The measure was opposed by groups such as the Maine Renewable Energy Association, Associated General Contractors and the Maine State Chamber of Commerce. But representatives from organized labor organizations described the veto as just the latest of several "anti-labor actions" this legislative session from Maine's Democratic governor.

“Workers deserve an opportunity to have their voices heard and to decide for themselves whether they want to join a union,” Cynthia Phinney, president of the Maine AFL-CIO, said in a statement. “President Biden has made that clear, and several governors in the South have used their power to try to hold workers back. We had hoped Gov. Mills would join with the President, and not take positions more aligned with anti-worker ideologues.”

Mills has now vetoed seven bills from the legislative session that ended last week. She has until early- to mid-week of next week to either sign, veto or allow a host other bills to become law without her signature.

Lawmakers will return to Augusta in the coming weeks to decide whether to uphold the vetoes or overturn them with two-thirds votes in both chambers.