The state supplemental budget is heading back to the Maine House, with Republicans expected to attempt to amend the short-term spending plan to include additional tax breaks that would primarily benefit large corportations.
Both the House and the Senate took up the supplemental budget Wednesday, which makes adjustments to the final year of the state’s budget. In a vote Wednesday morning, the House approved the Democratic budget plan 83-66. But while that vote was sufficient to send the measure to the Senate, it fell short of the two-thirds majority needed to ultimately pass the legislation. The Senate then passed an amended version of the budget 24-10 — a two-thirds majority — sending it back to the House for consideration.
“The moment is now to pass this budget, to deliver for the Maine businesses and families and communities across the state,” Rep. Teresa Pierce (D-Falmouth), House chair of the Appropriations and Financial Affairs Committee, told members of that chamber before the Wednesday morning vote. “I urge all of my colleagues to join me in voting for this supplemental budget.”
The supplemental budget proposal includes curtailments across state departments put in place by Gov. Janet Mills in response to the financial shortfall caused by the pandemic. It also includes what critics have called a double tax break for all recipients of the Paycheck Protection Program. Advocates have criticized that proposal as a giveaway to profitable corporations at a time when that money is needed to fund initiatives to help those most in need. The House version actually goes further in providing tax breaks on PPP loans than the proposal put forward by Mills, who sought to cap that giveaway at $1 million in corporate profits.
The budget bill also contains a tax credit for Mainers who received unemployment benefits, targeted relief for direct care workers and nonprofit providers, money to support early college programs and K-12 education, and funds for affordable housing, among other programs.
Where the two parties split was over whether the budget should include additional tax breaks for wealthy corporations. Republicans pushed for $32 million in further corporate tax cuts, summed up by Democrats as “incentives for off-shore foreign investments” and “tax breaks to the wealthy-elite for three-martini lunches.”
Senate Democrats call out GOP for holding up relief for ‘lavish tax giveaways’
After its passage in the House, the Senate took up the supplemental budget bill Wednesday evening, with the debate centering around the effort by the GOP to include more tax cuts for the large corportations in the package.
The Senate eventually passed the budget by a 24-10 vote late Wednesday. That approval came with the support of all Senate Democrats and two Republicans — Sen. Bradlee Farrin (R-Somerset) and Sen. Richard Bennett (R-Oxford). Somerset and Bennett voted for the package after the budget was amended to add funds to the Bureau of Veteran Services.
Before that amendment, much of the debate over the budget focused on Republicans’ desire to conform the spending plan with federal tax law on Foreign-Derived Intangible Income (FDII) — a deduction domestic companies can take on a specific percentage of export sales and an area of tax law that Senate Minority Leader Jeff Timberlake (R-Androscoggin) freely admitted that he didn’t fully understand.
But as pointed out by Sen. Nate Libby (D-Androscoggin), very few businesses in Maine actually use the FDII deduction, with just 10 taking it in tax year 2018.
In addition to FDII, Republicans are also pushing about $24 million more in tax breaks in the supplemental budget that would largely benefit large corportations.
But with the deadline for corporations to file taxes fast approaching, Senate Democrats blasted Republicans for trying to hold up the relief for Mainers included in the supplemental budget over giveaways for the rich.
Sen. Heather Sanborn (D-Cumberland) said businesses need certainty about what they will pay in taxes, arguing that the GOP’s obstruction is instead creating uncertainty in what has already been a difficult year.
“It’s March 10,” Sanborn, who owns Rising Tide Brewing in Portland, said. “Our corporate income taxes are due in five days. Just like the other 28,270 Maine businesses, we can’t file them until we know whether the expenses that were covered by our PPP loans are taxable in Maine.”
Sanborn also expressed frustration that after a bipartisan deal had been struck on PPP conformity, Republicans moved the goalposts, demanding that the state spend $32 million dollars on what she called “lavish tax giveaways” that “don’t relate to the pandemic at all.”
Sen. Mark Lawrence (D-York), added that total tax conformity — the Republican’s stated position — is not something that any state in the country has done.
“All it is is an excuse not to vote for this budget,” Lawrence said of the GOP’s stance. “This budget passes great relief for Mainers, does what we need on PPP and gets relief to unemployed people in Maine. And I call on everybody in this body to do what is right and get this budget passed. Let’s help Mainers.”
Assistant Senate Majority Leader Mattie Daughtry (D-Cumberland), echoed that sentiment, saying FDII and tax breaks for “three martini lunches” are not what Mainers are focused on during the pandemic. She said the proposed budget will provide relief across the state, including for the multitude of people who lost their jobs during the pandemic.
“This budget is about making sure that we get back on course,” she said. “Change has happened, and this report makes sure not only are we getting back on the right course, but that we’re working for all of Maine.”
Photo: Maine’s House of Representatives being sworn in at the Augusta Civic Center last year | Secretary of State photo
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