AUGUSTA, Maine (AP) - Republican Gov. Paul LePage proposed a two-year, $6.8 billion budget Friday that would reduce Maine’s income and corporate taxes while cutting about 500 state jobs and changing school funding.
LePage said his goal is “mitigating the severe damage” done by citizen initiatives such as the minimum wage hike. Maine’s minimum wage is set to increase from $7.50 an hour to $9 this year, going up to $12 by 2020.
In his budget, LePage called for lowering the top individual income tax rate from 10.15 percent to a 5.75 percent flat tax and reducing the top corporate income tax rate from 8.93 percent to 8.33 percent. He also recommended repealing the existing state education funding formula, eliminating 500 state jobs and removing caps on charter schools.
Legislators will pour over the proposal this weekend in preparation for a typically lengthy debate. Legislative leaders were told they could not have a briefing on the budget on Friday and said they expect a briefing from LePage on Monday. Democratic House Speaker Sara Gideon said her party will focus on tax cuts for middle class residents and investing in students and workers.
The governor - known for his calls for “right-sizing” state government and cracking down on welfare fraud - has indicated in radio interviews that he doesn’t want to fight with legislators, and expects his proposals to be ignored.
LePage has long asked agencies to develop and submit tight budgets that include justifications for all expenses. Last year, his office confirmed that hiring for executive branch positions had ceased but that LePage would approve filling some vacancies if requested by departments.
Maine is running a revenue surplus of $49 million so far this fiscal year, according to recent administration estimates. His administration also credits the governor with the smallest gap between state revenues and expenditures in the last 16 years.
LePage’s fiscal accomplishments include reducing the state’s unfunded public pension liability from $4.1 billion to $2.4 billion - a decrease of 41 percent - and paying off a $748 million debt to Maine’s hospitals.
But LePage’s 2015 proposal to reduce income tax by increasing the sales tax proved highly unpopular, and he has said he won’t try that route again.
In recent radio interviews, LePage has said he’s lost sleep throughout what he’s described as a particularly grueling process of coming up with a new budget. He’s said major cuts are needed to mitigate the impact of voters approving a new income surtax and minimum wage hike.
He has warned the voter-approved referenda will harm Maine’s economy, keep professionals from moving in and lead to rising costs that will particularly impact the elderly on fixed incomes. Supporters say the minimum wage hike will boost Mainers’ paychecks and spur the economy.
Voters approved an additional 3 percent tax on individual incomes over $200,000, which would give Maine one of the highest tax rates on high earners nationwide.
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