‘Wolf in sheep’s clothing:’ Dems hold the line against GOP budget demands

Evan Popp contributed to this reporting.

Democrats in Augusta advanced the first part of a two-part budget late Thursday. The vote was along party lines against protests from Republicans, who are demanding tax cuts at the same time that the state is facing significant funding needs to address the housing crisis, opioid epidemic, lack of childcare and a deteriorating direct care workforce, among other challenges.

Maine’s Democratic majority passed what they described as a continuing services budget that only covers the state’s existing spending obligations. They did so with plans to pass a supplemental budget later this spring that will likely contain the bulk of their new funding priorities. 

No Republicans voted for the $9.8 billion baseline budget, which passed 79-61 in the House and 22-11 in the Senate in initial votes. The House subsequently gave final approval of the measure on a 76-48 vote while the Senate voted 22-9 to give its final approval. Both votes were also party line. 

By splitting the budget process and passing the first part by a simple majority, Democrats have taken some leverage away from the GOP to get concessions through the typical two-thirds majority budget that could result in a government shut down if they don’t make a deal by June.

In lengthy floor speeches throughout the night, a number of Republicans bemoaned the move, arguing that they were being cut out of the process even though Sen. Peggy Rotundo (D-Androscoggin), Senate chair of the Appropriations and Financial Affairs (AFA) Committee, pointed out that there is a long precedent in Maine history of the legislature passing two-part budgets.

Rep. Laurel Libby (R-Auburn) called Democrats’ actions a “perversion of the constitutional budget process.”

Sen. Matt Pouliot (R-Kennebec) likened Republicans’ minority status in the legislature to being a protected class of people legally protected from discrimination. “How many people came to the legislature to fight for minorities? Well, we are a minority. Who’s going to be our voice?”

Rep. Melanie Sachs (D-Freeport), House AFA chair, said during her floor speech that she supports the continuing services budget because “it keeps our promises, promises we made on a bipartisan basis when we last passed a two-thirds budget just a few months ago.” 

“This budget funds those continuing services to support the very people we’ve been talking about today with school meals, with cost of living increases for our health care providers, for veterans, for farmers, for $101 million to keep our promise for 55% [of education],” she added. 

Along with opposing the continuing services budget, in a series of floor amendments introduced Thursday, Republicans pushed to include language in the spending plan that would reduce the rate for Maine’s lowest tax bracket from 5.8% to 4.5%. Similar proposals were rejected earlier in the month by Democrats ahead of Thursday’s vote. The floor amendments each failed to get any Democratic support. 

An amendment introduced by Sen. Eric Brakey (R-Androscoggin) to change “Vacationland” on the state license plates to “Taxationland” was postponed in the House and failed unanimously in the Senate.

Additionally, an effort from Republicans to rollback MaineCare coverage for abortions was voted down by Democrats. The majority of Mainers, in fact, actually support expanding access to abortion. 

Republicans pointed to the projected budget surplus to argue for the tax cuts, which analysts said would primarily benefit wealthy Mainers.

“We are over-collecting taxes from Maine people,” said Sen. Rick Bennett (R-Oxford). 

Maura Pillsbury, a state and local tax analyst for the Maine Center for Economic Policy, disagreed. “It’s really not a surplus if we’re not meeting really important needs,” she told Beacon. “To say that we should give Mainers a tax cut, it’s like a wolf in sheep’s clothing. It’s not really what it claims to be and it’s not really helping the people they claim to want to help.”  

An average tax cut of just $7 for low-income Mainers

An analysis by the Maine Center for Economic Policy found that the Republicans’ tax plan would cost the state $200 million and provide an average tax cut of just $7 to people making below $25,000 per year.

“This proposal would make Maine’s tax code more regressive, meaning it would give greater tax cuts to people making more money,” Pillsbury said.

While proposing to help low-income people, the analysis found that the Republicans’ plan would actually provide a greater benefit to higher earners, with residents with middle-incomes between $50,000 and $100,000 receiving an average cut of $283 and upper-incomes of $150,000 or higher getting an average cut of $566.

“Maine has a high personal exemption and standard deduction, which lowers taxable income, thus making people with higher incomes more likely to reach the top of the lowest bracket and see the greatest benefit of this type of tax cut,” Pillsbury explained.

Pillsbury said that if lawmakers sincerely want to put money into low-income Mainers’ pockets they should expand programs like the state’s Child Tax Credit and Earned Income Tax Credit. Unlike untargeted income tax cuts, such refundable tax credits give direct cash assistance to low-income people no matter how little their tax liability might be.

“With a targeted tax credit, especially if it’s phased out as income increases, you’re just going to see more of the benefit going to folks who really need it,” Pillsbury said. 

Pillsbury and lawmakers previously warned that it would be premature to consider permanent tax cuts in response to the state’s unexpected fiscal strength after years of underfunding and an uncertain economy in the years ahead.

Democrats have an opportunity in the supplemental budget to expand programs like the CTC, which at the federal level halved childhood poverty when it was temporarily expanded in 2021. As Beacon has been covering this session, assistance for low-income people is just one of the many needs facing the state and will be considered alongside priorities like housing, healthcare, childcare, paid family leave and new initiatives to combat the climate and overdose crises.

“Like some of my colleagues here I am deeply offended, but not by a budget process,” said Sen. Mike Tipping (D-Penobscot) on Thursday. “I’m deeply offended that too many Mainers right now can’t go to the doctor. Too many can’t find childcare for their kids. Too many can’t find a place to live. That’s what we should focus on, not another tax break that predominantly benefits the wealthy.”

The continuing services budget, which needed to be passed by the end of March in order to go into effect at the start of the new fiscal year in July, is a break from what has become an undemocratic norm in Augusta of allowing the deadline to lapse and then needing the approval of two-thirds of the legislature to pass the budget as an emergency measure or risk a government shutdown.

The two-thirds budget gives the Republican minority incredible leverage to water down the majority’s spending priorities and push through pieces of their own agenda, even as the Maine GOP underperformed during the 2022 midterm election, losing the governor’s race by a wide margin, failing to make any gains in the Senate and losing ground in the House.