Report on state budget negotiations

Dear Friends and Neighbors in House District 35:

Not much sleep over the last week as we enter the closing weeks of the legislature.  We are now in day-long and evening sessions which are subject to an increasing volume of debate as we deal with more difficult and controversial bills.

Most notably,I have been privileged to work closely with the Appropriations Committee as they persisted and endured to reach unanimous bipartisan agreement on the state budget for the next two years.

As you know, the committee used my report on the structural gap in state funding for schools as leverage for increasing the education parts of the budget.  

Over several late-night and all-night sessions last week, I got to see how that effort resolved.

In conclusion, it was a very tough budget, especially around the issue of revenue.  Democrats ended up conceding their primary goal of achieving greater ‘tax fairness’ to alleviate Maine’s increasing reliance on the regressive property tax.  Republicans made significant concessions on their absolute position against any increase in state-level taxes.

All in all, the Appropriations Committee members from both parties did extraordinarily good work together.  There are things in their budget for everyone to dislike.  But I know from being there through the darkest hours that this unanimous report is an heroic accomplishment.

The legislature will vote on the budget as early as Thursday.

Here’s a summary of some of the major components of the Appropriations’ budget agreement about which some of you have expressed particular interest:

  • Increases the sales tax from 5% to 5.5% for a limited period of two years from 2013-2015. This is projected to raise $134M in revenue
  • Increases the lodging and meals tax from 7% to 8% with the same two-year sunset. This is estimated to raise an additional $45M in revenue.
  • Adds $58M in school subsidy.  (I had made the case that $73M was necessary to avoid additional cost shifts to property taxpayers.)
  • Accepts Governor’s proposal to shift liability for normal teacher retirement costs from state to local school districts but adds stronger statutory language which preserves this shift in the future only if the state ramps up aid to local schools by at least 1% per year.
  • To compensate for the retirement shift, agreed with my proposal to increase the minimum special education subsidy to minimum receivers of state aid like MDI (from 25% to 35% for FY14 and 30% in FY15).
  • Restores $125M in municipal revenue sharing – two-thirds of the Governor’s proposed cut.
  • Rejects the Governor’s cuts to General Assistance and TANF
  • Provides funding to reduce the number of people on the waiting list for the Section 21 and Section 29 waivers for Developmentally Disabled persons
  • Restores the Medicaid reimbursement rate for Critical Access Hospitals such as MDI Hospital.
  • Transfers the Women, Work, and Community Program to the University of Maine System with funding.
  • Restores the Homestead Exemption – Applies to persons under 65 years of age,
  • Replaces the property tax Circuit Breaker with the Tax Fairness credit, for which application can be made on the income tax form.
  • Restores the Business Equipment Tax Reimbursement program
  • Provides Maine residents with a Maine Adjusted income of up to $40,000 per year, a refundable property tax fairness creditagainst State income taxes.
  • Restores $2.8 million for Clean Elections for legislative races only.    Funding for Gubernatorial races has been removed.   (The Republican proposal was $2.4 million, and the Democratic proposal was $4.7 million.)

Representative Brian Hubbell,
Maine House District 35
Bar Harbor, Southwest Harbor, Cranberry Isles, Mount Desert