While majority Republicans in the Senate and Democrats in both chambers had reached a tentative deal Sunday evening, the House GOP caucus, backed by Gov. Paul LePage, is holding out for a deal that includes income tax cuts.
Support from at least some House Republicans is needed to reach the two-thirds threshold necessary to pass the multibillion-dollar spending plan. The current budget expires at the end of the month and the current stalemate has the State House buzzing with hushed talk of a potential government shutdown.
On Wednesday afternoon, party leaders in the House already were laying the groundwork for casting blame in the case of a government shutdown, which would happen if lawmakers can’t come to an accord on a spending plan by June 30.
Earlier in negotiations, party leaders and top officials on the Appropriations Committee pooh-poohed the idea of a shutdown, saying a deal would be reached. Rep. Peggy Rotundo, D-Lewiston, House chairwoman of the committee, said she was disappointed that a deal wasn’t finished by Wednesday evening, but she was still optimistic.
“We always get to a point where things look like they won’t be resolved, but they always do,” she said.
But the shadow of impasse still looms, as House Republicans insist the deal include income tax cuts and welfare reform, both of which have been struck by the budget committee and are not included in the tentative deal made by Senate Republicans and Democratic leaders in both chambers.
“We have a bipartisan budget deal that we have struck. If government shuts down, it will be because House Republicans want to give a tax giveaway to the rich,” said House Speaker Mark Eves, D-North Berwick, on Wednesday.
Eves and House Minority Leader Ken Fredette, R-Newport, have been meeting for several days to try to reach an accord that can satisfy both caucuses in the chamber, but Eves said Wednesday that the talks had been unproductive.
Democrats have said any income tax cut must be distributed to benefit Maine’s middle class, not its wealthiest citizens. Eves said Wednesday that condition isn’t met by the governor’s proposal, which would lower the top marginal income tax rate from 7.95 percent to 5.75 percent, or the GOP plan, which would drop it to 6.5 percent.
Eves and his allies have said those plans disproportionately benefit the wealthiest Mainers, pointing out that under LePage’s plan, 50 percent of the total income tax relief would go to the top 10 percent of earners.
Fredette said Wednesday that if the government shuts down, it would be the fault of Democrats and Senate Republicans, who he said crafted a compromise budget without input from House Republicans.
“When we weren’t invited to the table for that conversation, they decided to go forward without those people necessary that they needed for a state budget,” he said.
LePage said Wednesday he still was interested in finding a way to include tax cuts in the budget and released a list of potential cuts to government services to pay for them.
Eves said Wednesday afternoon that it was likely too late for a deal to be made, saying the House caucuses “are very far apart, and we have been since January.”
However, by 9:30 p.m., leaders still weren’t ready to shut the door on a potential deal that could pass muster in both chambers. Senate Republican leader Garrett Mason, R-Lisbon, said “very intense negotiations” were continuing among leadership in all four caucuses.
Neither LePage nor any members of his staff were involved in those negotiations, Mason said.
Fredette and his caucus are seemingly the only staunch allies LePage has left in the budget showdown, which began when he released his $6.57 billion two-year spending plan back in January.
The compromise budget unveiled Sunday night excludes LePage’s central budget proposal of tax reform, including the income tax cuts. It also includes $50 million in additional spending on education — a top Democratic priority — and holds the line on municipal revenue sharing and property tax credits for all homeowners. LePage proposed eliminating revenue sharing in the budget’s second year and nixing the property tax credit for homeowners under 65 years old.
In return, Democrats have agreed to a constitutional amendment that would require any future income tax cuts to win the approval of two-thirds of the Legislature. Such a measure also would require voter approval.
Time for the Appropriations Committee to pass a final deal is running short. The panel already has blown past several self-imposed deadlines and is under pressure to finish its work as soon as possible. Leaders in both parties have said a budget must be approved by the Legislature and sent to LePage’s desk — where a veto is all but certain — by the middle of next week.
The four Republican House members on the budget committee — Reps. Heather Sirocki of Scarborough, Tom Winsor of Norway, Jeff Timberlake of Turner and Robert Nutting of Oakland — have formed a bloc of sorts, siding with the governor on several line-item votes.
The group is expected to present its own budget to the full Legislature, breaking with the tradition in the Appropriations Committee of unanimous budget reports. Their proposal likely will be based on a scaled back version of LePage’s plan, drafted by Timberlake and Nutting.
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