Maine Budget Details Released


Details on the latest state budget deal emerged on Tuesday morning, after Republican and Democratic legislative leaders reached a deal late Monday night to avoid a state government shutdown.

“After weeks of tough negotiations we have reached an agreement that we feel moves Maine forward,” announced House Republican leader Ken Fredette (R-Newport).

The budget deal reportedly makes several substantial changes to the tax code, as well as many changes to welfare and social services programs. The budget also:

  • Spending
    • Contains a roughly $300 million or 4.6% increase in spending from the previous biennium.
    • Keeps the municipal revenue sharing program at approximately $62 million per year
    • Increases funding for K-12 education by $40 million per year.
    • Devotes more funding for nursing homes and waitlists.
  • Income tax
    • Modifies the income tax rates and brackets from:
      • $0 – $5,200 –0%
      • $5,201 -$20,900 – 6.5%
      • $20,900 or more – 7.95%
    • To
      • $0 -$21,400 – 5.8%
      • $21,400 – $50,000 – 6.75%
      • $50,000 or more – 7.15%
  • Income tax modifications
    • Exempts 100% of military pensions from the individual income tax.
    • Maintains the $10,000 retirement deduction.
    • Removes the long-term care premium and section 529 income tax deduction.
    • Increases the standard deduction for single-filers from $6,200 to $11,600
    • Phases out standard and itemized deductions between $70,000 and $140,000 of Maine Adjusted Gross income for single filers.
    • Counts charitable contributions towards the itemized deduction cap.
    • Increases the Earned Income Tax Credit and makes it refundable, meaning taxpayers can receive a payout should the tax credit exceed their tax burden.
  • Sales tax
    • Keeps the general sales tax rate at 5.5% and stops it from decreasing to 5.0% as it is scheduled to do later this year.
    • Increases the service provider sales tax to 6% sales tax and removes the exemption for basic cable and interstate calls.
    • Increases the meals and lodging sales tax from 8% to 9% on January 1, 2016.
    • Creates a Sales Tax Fairness Credit that is phased out starting at $20,000
  • Property tax
    • Increases the Homestead Property Tax Exemption from $10,000 to $15,000 in 2016 and to $20,000 in 2017 for all property owners.
  • Estate tax
    • Conforms Maine to the $5.5 million federal estate tax exemption.
  • Welfare reform
    • Removes asylum seekers from the General Assistance program.
    • Removes the cap on TANF which eliminates the welfare cliff and encourages TANF recipients to return to work.
    • Alters the formula for General Assistance so there is a 70% reimbursement for all municipalities.
    • Reforms SNAP, TANF, and SSI for asylum legal non-citizens

The deal has support from all four legislative leaders, with all of them acknowledging that it addresses several areas of concern and satisfies many of their legislative priorities.

“I believe this budget has something for everyone in Maine,” said Senate President Michael Thibodeau (R-Wald) in a statement announcing the deal. “We were sent here to represent them, and I am pleased that we were able to lower their tax burden while at the same time take steps to keep property taxes in check and fund vital state services.”

“This budget invests in our youngest and our oldest, our workers and our retirees, and provides a meaningful tax cut to al Mainers,” said Senate Democratic minority leader Justin Alfond (D-North Berwick).

The budget deal is scheduled to be taken up by both the Maine Senate and House of Representatives on Tuesday.

If it is approved, it will then head to Governor LePage’s desk to be signed or vetoed. The Governor has not indicated whether or not he will support the budget, but has 10 days to take action.