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Maine Legislative Panel Tackles $40 Million Budget Puzzle
12/02/2013   Reported By: A.J. Higgins

Maine lawmakers are facing a tough puzzle in the next session that begins in January: how to find taxes  or new revenues - or a combination - that add up to $40 million. Over the last three months, a special panel of lawmakers, business representatives, economists and others has developed a road map to guide the Appropriations Committee on its quest to identify those savings - or risk further reductions in revenue sharing to Maine's cities and towns. Members of the Tax Expenditure Review Task Force today said they're focused on eliminating loopholes, but are avoiding new taxes. A.J. Higgins has more.

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State Sen. Anne Haskell says she never had illusions about how difficult it would be for the task force to complete its $40 million goal. But by the time the members had signed off on a list proposed revisions, the Portland Democrat was confident in the outcome.

"These are tough choices. We've carved some out, we've set some aside," Haskell says. "There was real value in just the list of things that we didn't go near."

The task force has concluded that $40 million in savings could be found in more than a dozen areas. Among them: lifting the sales tax exemption on certain purchases by non-profit groups, imposing a tax on some Internet services, and imposing a new tax on basic cable and satellite TV services.

Money could also be saved by reducing benefits for the Business Equipment Tax Refund program, and by scaling back economic development incentives, such as "Pine Tree Zones."

But some of the less politically viable ideas include a sales tax on amusements, such as movies and concerts, or personal services such as spa treatments and hair stylists. Task force member Nelson Durgin, of Bangor, says some of these taxes have been adopted by other states.

"Amusements, some of the basic cable and satellite, personal care -- those sort of things which have never been taxed - they are taxed in other states, there are other approaches," Durgin says. "Those have higher dollar value than the exemptions but they may not have the political wherewithal to get through the Legislature."

"I think I've got a better chance of playing centerfield for the Red Sox next year than those kinds of new taxes passing in isolation," said Sen. Roger Katz.

Katz, an Augusta Republican, opposes making changes to state's tax policies, that he says could actually impede business expansion and job creation in Maine. But he does think it may be time to consider lifting some of the tax exemptions for non-profits.

"Our tax exemptions and our tax credits, when you add the value of all that foregone income up, it's actually more than we actually take in," Katz says. "Just like any family does with their own budget, we have to be looking at how we're spending our money periodically, so we can make sure we're accomplishing what we want to. If a business program is encouraging more employees to be hired, and it's encouraging more capital investment, great. But if it's not doing the job, then we should be thinking about getting rid of it."

Members of the task force will present their draft report to the Appropriations Committee next week for further consideration.



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