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Maine Senate GOP Leader Splits With Gov on Revenue Sharing Plan
02/27/2013   Reported By: A.J. Higgins

Gov. Paul LePage has proposed suspending revenue payments to Maine's cities and towns for the next two years in order to balance his budget, and still preserve tax cuts he approved two years ago.  Local officials have vigorously criticized the plan, saying it will force further increases in property taxes.  Now, Republican leaders at the State House are talking about an alternative to the revenue sharing cuts - but they're refusing to budge on any new taxes. A.J. Higgins has this report.

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Maine Senate GOP Leader Splits With Gov on Revenue
Originally Aired: 2/27/2013 5:30 PM

The governor's proposed two-year $6.3 billion budget could force Sanford residents to absorb local property tax increases of more than 12 percent. In Old Orchard Beach, the loss of state funds punches a $1.7 million hole in the local budget, and nearly $5 million for Biddeford.

Driving a significant portion of those losses is Republican Gov. Paul's LePage's two-year suspension of revenue sharing payments to municipalities that Democrats say creates a $280 million deficit for Maine's cities and town.

Former Augusta Mayor Roger Katz, who is now assistant Republican leader in the Maine Senate, is joining Democrats in opposing the governor's plan because of its impact on local property taxes. "You know we don't let cities and towns tax anything except property, and property taxes are probably too high in this state to begin with," Katz says.

Katz says many municipal officials are equating LePage's revenue cuts to a de facto tax shift for local property taxpayers. He's sponsoring a bill that would not only continue to provide state revenue payments at current levels, but eventually ramp those payments up to 5 percent of the total income and sales taxes collected annually.  That's the amount that was approved by state lawmakers 30 years ago.

What Katz isn't proposing is a way to offset the loss of nearly $300 million to LePage's budget plan. "You know that's the good thing about having 186 legislators," Katz says. "There are lots of good ideas out there. The governor himself has said that he doesn't particularly like his own revenue sharing proposal - he's looking for alternatives, and hopefully, collectively, we can come up with some better way to bridge the gap."

Democrats, like Senate President Justin Alfond, welcomed Katz's bill as a bipartisan approach to solving the municipal revenue sharing problem. "Sen. Katz has an idea and he doesn't know how to pay for it, but it's an idea," Alfond says.

Other Democratic leaders, including House Speaker Mark Eves, are  backing Katz's efforts. Eves says he wants a vigorous debate that reconsiders the LePage tax cuts of two years ago.  And House Democratic Leader Seth Berry says taxes have to be part of the options lawmakers consider as they attempt to craft a new two-year budget.

"There's no question that we have plenty of options in front of us and we need to look at all of them," Berry says.

But that's where House Republican Leader Ken Fredette draws the line. This week, on WCSH-TV's Newscenter, Fredette said if Democrats pursue new taxes to balance the budget he would oppose the plan - even if it meant a state shutdown.

"I think the more that we look towards closing tax loopholes, towards raising taxes to spending the tax cuts, I think quite frankly that's going to leave us in a very precarious position and possibly a government shutdown in the latter part of the year," Fredette said.

Senate President Justin Alfond says Fredette's threats seem aimed at trying to derail budget negotiations before they even begin.

"Representative Fredette has been saying this for over a month now and I have actually confronted him and said, 'You know, I don't think this is a smart approach,'" Alfond says. "'I think the language is very, very destructive, and why are you trying to derail a process that hasn't even started?'  You have a leader in the Republican Party basically showcasing their plan that if they don't get what they want, they're going to shut the state down."

Lawmakers on the Appropriations Committee are scheduled to take up the new state budget on March 11th.



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