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LePage's Proposed Budget Cuts Come Under Fire
03/13/2013   Reported By: A.J. Higgins

Major savings within Gov. Paul LePage's $6.2 billion state budget came under fire today from dozens of business interests. Individual homeowners and municipal officials also lined up to oppose LePage's massive reduction to the Homestead Exemption and Circuit Breaker programs, the elimination of the business equipment tax reimbursement program and the suspension of nearly $200 million in revenue sharing payments to Maine cities and towns. As A.J. Higgins reports, many of the speakers say they would prefer sales tax increases to LePage's cuts.

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It's a $12 million savings to Gov. Paul LePage's budget, but several business owners attending an Appropriations Committee hearing on the state's next two-year budget perceive Deputy Finance Commissioner Michael Allen's announcement as an act of betrayal.

"In order to target the state's scarce resources and to simplify the filing process for businesses, this part proposes to eliminate the BETR program -- the Business Equipment Tax Reimbursement Program - for property taxes paid on or after Jan. 1, 2013," Allen said.

As part of his plan to eliminate BETR, LePage would not require businesses to pay the tax on equipment, and would instead reimburse cities and towns for the loss of revenue under the Business Equipment Tax Exemption program, known as BETE. The administration would temporarily increase payments by 10 percent, but that didn't satisfy some town officers and business owners.

Edward Snook, plant manager at B&M Baked Beans in Portland, says his corporation made investments in Maine because of the BETR program, and he says it's already built expected reimbursement payments into its budget. Snook says there is a direct relation between the level of capital investment a company can make in its equipment and the number of jobs it can sustain.

"Reduced investment eventually leads to reduced employment," Snook said. "The elimination of the BETR program for property tax paid in 2013 and early 2014 will be reviewed as a tax increase by our corporate headquarters. The skipped BETR payments will cost my company over $65,000. This loss will negatively impact future investment decisions, and more importantly, will put pressure on jobs at our facility."

Maine Chamber of Commerce President Dana Connors also objects to the elimination of the business tax reimbursement program. He says Maine businesses have made investments on the presumption that the state would honor its commitment for reimbursement.

"The proposal in front of you cuts $38 million in BETR payments to companies that have invested in Maine, but it only raises $11.7 million for the budget," Connors said. "We believe there must be a more efficient way to raise $11.7 million, and we would be happy to work with you in the coming weeks to find that better solution."

In addition to the BETR elimination, LePage also wants to scale back eligibility for the Circuit Breaker program that provides tax reimbursements for renters and property taxpayers, and the Homestead Exemption program for homeowners.
Michael Allen said the Circuit Breaker program would drop from 90,000 participants under the plan to 30,000 to save more than $70 million and the Homestead exemption would eliminate 230,000 homeowners from tax relief benefits to save $33 million over the next two years.

Allen said the Homestead and Circuit Breaker programs would provide additional benefits to those 65 and older. But Jack Kareckas, a South Berwick town councilor, along with several other speakers, suggested another idea.

"Following along with the principal of not criticizing without offering an alternative, I recently read and find attractive the following proposed increases: a penny on the general sales tax, from 5 percent to 6 percent, would generate approximately $146 million, a penny on meals and lodgings, from 7 to 8 percent, would generate approximately $29 million," Kareckas said. "We all embraced the Brookings Report, the old idea of Maine being a cheap date. It's still that way. I think we have some room to employ that technique in order to fund state spending."

Testimony on other aspects of the governor's two-year budget proposal will continue through March 22.


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