The Good, Bad and Ugly of the First Session
With the First Session of the 131st Legislature complete, it’s necessary to review exactly what lawmakers did (and didn’t) accomplish in 2023. If one had to pick winners and losers of the session, the victors would undoubtedly be the Mills administration and big government, and the losers would be the average Maine citizen. Unfortunately, spending ballooned as a result of the biennial and supplemental budgets and lawmakers provided no tax relief to working Mainers. However, there were a few bright spots among the many policy failures, so let’s review the good, the bad and the ugly of the 131st Legislature’s first session.
Transportation Funding Changes
One of the few victories of the first session was the creation of a new and sustainable source of revenue to fix and maintain our roads and bridges. In an effort to bridge the state’s more than $200 million transportation funding shortfall, lawmakers opted to reallocate revenue within state government in an intelligent and fiscally responsible way. Under the approved bill, 40% of automobile-related sales taxes will be transferred from the General Fund to the Highway Fund moving forward.
This change is good for Mainers for a few reasons. The first, of course, is that Maine’s roads are in poor condition and need to be better maintained, both for the average Maine motorist and commercial businesses. The second is that this change moves hundreds of millions out of the General Fund to the Highway Fund, meaning lawmakers can’t spend these revenues on their pet projects. Lastly, and most importantly, the reallocation of these funds mostly covers the state’s transportation funding shortfall and reduces the need for future borrowing. This means Maine taxpayers will save millions of dollars in future debt payments and get better infrastructure without having their taxes increased. That’s a win any way you slice it.
Reforming Mining Regulations
Maine is home to one of the richest, densest lithium deposits in the world. In the western Maine town of Newry, there’s an estimated $1.5 billion worth of lithium waiting to be extracted from Plumbago Mountain. A bill was passed to reform the Metallic Mineral Mining Act (MMMA) to allow for the mining of lithium. Until this reform was passed, the MMMA made it virtually impossible for deposits like this one to be extracted.
This change is significant and could result in millions of dollars in additional economic output for the state. Piedmont Lithium, a company that operates at a similar lithium site in North Carolina, estimates its work will create 480 high-paying jobs, with the average worker earning $82,000 per year. Within five years of operation, they also estimate the site will create 1,050 additional jobs as an indirect result of their work and lead to $4 billion in output for the local economy.
How great would it be for the western Maine economy to experience this kind of boost? With the new MMMA reforms enacted, economic growth like this is finally possible for western Maine.
Ending Home Equity Theft
The Legislature responded to the Supreme Court’s recent decision in Tyler v. Hennepin County by reforming Maine’s home equity theft law.
Before LD 101’s passage, Maine law allowed municipalities to keep the full proceeds of a home sale if a property was seized due to outstanding tax debt and were not required to return the equity built over time to the former homeowner. For example, if a homeowner had outstanding property tax debt and fees totaling $20,000 and the property was eventually seized and sold for $100,000, the town could keep the $80,000 difference.
This process is known as home equity theft, and it was legal in 12 states––including Maine––before the passage of LD 101. Under the new law, municipalities cannot automatically keep these funds as they used to. Instead, the law enables former property owners in these situations to request the equity be returned to them within 90 days of the sale. While this isn’t as favorable as automatically returning equity to Maine citizens who have their property seized, it is a step in the right direction and better than the old law, which allowed municipalities to steal from Mainers.
Killing the Inspection Fee Increase
Mainers spend millions in fees and repairs and countless hours getting their vehicle inspected each year with no evidence that vehicle inspections yield safer cars and roadways. Fewer states are requiring vehicle inspections whatsoever and some states only require them every two years. The nationwide trend is clearly moving in the direction of deregulation and wholesale elimination.
That’s why it’s particularly egregious that lawmakers sought to increase motor vehicle inspection fees and create a new digitized inspection program this session. A digital inspection program means the State Police would maintain a digital record of you bringing your car into a shop for inspection services. If one station failed your car and said you needed repairs, a record of that visit would be created in a database maintained by the state.
The enactment of the bill, LD 900, would have officially ended the process of what’s known as “sticker shopping” in Maine, where a consumer brings their car to multiple different mechanics in the hope of getting the car stickered for the lowest cost. It would have also established a new and somewhat Orwellian system for the State Police to pull over Maine motorists.
During public debate on this bill, the State Police refused to answer or acknowledge the potential for them to use a failed inspection as the pretext for a traffic stop. If a motorist’s sticker was good until the end of the month but they brought their car in early for an inspection and failed, could a state trooper on duty be following that motorist on I-95, plug their license plate information into the digital inspection system, see that they failed an inspection and use that failure as the pretext for a traffic stop? Nobody knows––the State Police were very coy in addressing these concerns.
The good news is that this bill died by a 30-2 vote in the Senate and was subsequently killed in the House. For now, Maine motorists have avoided another attempt at being nickel-and-dimed by big government lawmakers.
Thwarting Proposed Tax Increases
Maine has the third highest tax burden in the nation, so the last thing Maine citizens need are new and higher taxes. Thankfully, many bills which proposed to increase taxes were killed. These proposals included hiking the income, lodging, car rental and estate taxes, to name a few. Fortunately they’re all dead for now, but there’s no doubt progressive lawmakers will go back to the drawing board in search of more politically palatable ways to increase your tax burden.
Corporate Welfare: Dirigo Business Incentive
In an effort to “stimulate business growth” in Maine, the Mills administration revamped the failed, 20-year-old corporate welfare scheme known as the Pine Tree Development Zone (PTDZ) program and replaced it with the new Dirigo Business Incentive (DBI) program. Rather than pursuing real tax reform for everyone––businesses and individuals, included––the governor’s new plan is more of the same old failed economic policy Mainers have grown used to over time. Like the PTDZ program, the DBI program won’t encourage new companies to resettle here but it will reduce the tax liability of existing firms that have no interest in leaving, much to the detriment of all Maine taxpayers.
Restructuring the tax code is possible if Maine were to eliminate all corporate welfare. Significant cuts to the sales, corporate, and individual income tax rates offset by reductions in corporate welfare would benefit all Maine citizens and businesses. Instead, the governor marshaled through the legislature more aimless handouts that do more harm than good to the state’s economy.
The DBI, which was rolled into the supplemental budget, amounts to another missed opportunity for the Mills administration to make Maine’s economy and tax code more competitive with the rest of the nation.
Offshore Wind Development
Instead of asking themselves whether offshore wind is a worthwhile endeavor for Maine ratepayers, lawmakers spent the session fighting over whether union or non-union workers should work on offshore wind projects.
Wind and solar are less reliable and have limited capacity compared to other forms of energy, like nuclear and hydroelectric. There are also reports that offshore wind development is detrimental and has negative effects––many of which are not fully understood––on marine life populations, yet lawmakers moved full speed ahead on offshore wind anyway.
It’s likely that offshore wind, like solar and onshore wind before it, will become Maine’s next big energy boondoggle. It will require massive amounts of subsidies and government favoritism to be competitive and, once installed, won’t be as efficient or productive as would other energy sources. The losers in this equation are Maine ratepayers, who continue to experience rising electricity rates due to bad policy that props up wind and solar.
Failing to fund the COVID-19 Review Commission
Unfortunately, the majority party in Augusta has no interest in evaluating or gaining greater transparency in the Mills administration’s handling of the COVID-19 pandemic, particularly as it relates to the emergency orders Gov. Mills issued while ruling by decree during a 15-months-long state of emergency.
Though LD 1801, a bill to establish the COVID-19 Review Commission, passed unanimously in both chambers this session, it died on the special studies table where legislative Democrats opted against funding it at the end of session.
The commission would have engaged in an expansive review of all that went on during the pandemic, including but not limited to data collection by the Maine Department of Health and Human Services, testing and tracing by the Maine Centers for Disease Control and Prevention, suicide, drug-related deaths and the effects of the pandemic response on k-12 public education, to name a few.
This bill was an excellent opportunity for the legislature to display unity to Maine people and acknowledge the need for a review and full accounting of what happened at all levels of state government. It’s failure to be funded from the special studies table tells every Maine citizen that the legislative majority believes government authority is more important than government accountability.
Paid Family Leave Program With New 1% Payroll Tax
Rather than follow the lead set by New Hampshire with its voluntary and free market paid family leave program, lawmakers opted to enact one that comes with punitive taxes on Maine workers.
LD 1964, which was incorporated into the legislature’s supplemental budget, establishes a new paid family leave program that is paid for by a 1% payroll tax shared by employers and their employees. It amounts to the largest tax increase on Maine workers in decades and directly violates Gov. Mills’ campaign pledge to not raise taxes on Mainers.
To be clear, paid leave programs should be created and managed by employers as they see fit to entice top talent in a competitive marketplace. Mandating that all businesses participate in a one-size-fits-all, state-run program is bad for businesses, workers, taxpayers and the state’s economy.
All the 131st Legislature had to do was look next door at its neighbor in New Hampshire and they would see what an economically viable paid leave program looks like. Unfortunately, Gov. Mills pretended she was between a rock and a hard place with an impending ballot initiative on the subject and forced Mainers into a new tax increase.
Busted Budgets: Record State Spending
Both the biennial and supplemental budgets passed by lawmakers in the first half of the 131st Legislature were fiscally irresponsible, partisan spending sprees that increase the burden on hardworking Mainers without offering them an ounce of tax relief.
The majority biennial budget, passed in late March by Democrats, was followed by an equally partisan supplemental budget. This spending collectively amounts to a staggering $10.3 billion, well beyond the rate of inflation and population growth in the Pine Tree State.
For the second time in two years, Democrats in the legislature bypassed the traditional consensus budget process and rammed through their preferred spending bill with little to no input from the conservative minority in Augusta. Had they worked in good faith with their counterparts, Democrats could have claimed victory for somewhere in the neighborhood of $200 million to $400 million in income tax cuts alongside their Republican colleagues.
Sadly, there was no attempt to include the minority in either budget bill, and no room for dissent or compromise in the budgeting process. Gov. Mills put forward her proposals and the Democrat majorities in both chambers merely tinkered on the margins before flexing their collective legislative muscles and passing their appropriations bills without input or collaboration.
Gov. Mills ran as a bipartisan collaborator, but she and her allies showed no interest in working across party lines towards compromise. The result of their hard-headedness is a radical expansion of the size and scope of state government without any relief for the average Mainer despite persistent inflation and economic uncertainty. Maine will one day look back at this budget cycle as a blown opportunity to right-size government and reform the tax code. .