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MTA: Government Affairs Update – June 12, 2017

(Reposted from Maine Tourism Association website: https://www.mainetourism.com/articles/post/government-affairs-update-june-12-2017/)

Local Option Sales Tax: The Legislature killed a proposal last week that would have allowed municipalities to implement a local option sales tax. LD 1522, An Act To Authorize a Local Option Sales Tax, allows a municipality to impose a local option sales tax if approved by referendum of the voters in that municipality. The referendum question must identify the rate of the local option sales tax and the purposes for which the revenue will be used.

The Taxation Committee amended the bill to restrict the local option sales tax to taxation of sales of prepared food and lodging, provide that the revenue must be placed in a special account to be expended only if specifically authorized by the local legislative body and change the distribution of revenue from the local option sales tax by increasing from 50% to 65% the amount transferred to the participating municipality and reducing the amount transferred to the Regional Economic Development Revolving Loan Program from 25% to 10%.

The House rejected the proposal May 30th. The Senate took the same action on June 7th.

Tip Credit Reinstatement: LD 673, An Act To Restore the Tip Credit to Maine’s Minimum Wage Law, was the main focus of Thursday’s Senate debate and received strong support from the chamber during its first showing in the chamber. The bill, which restores the tip credit to the minimum wage laws, passed in the Senate by a vote of 23-12.

Although there is clearly enough support by members in the Senate to enact the bill, it is currently one vote shy of garnering the 2/3 votes needed to have the measure take effect immediately. No action has been taken by the House at this point. It is expected that all minimum wage related legislation will be debated on the same day, possibly later this week.

Budget Update: Even though the Appropriations Committee has voted out three separate reports from committee, leadership is continuing to negotiate on a package that will be acceptable to most members of the Legislature.

Last week, House Democrats came forward with a proposal to fund education at 55 percent by Fiscal Year 19 while increasing the surtax’s threshold to $300,000 and lowering the 3 percent rate to 1.75 percent; the lower rate would raise $128 million over two years. Additionally, their plan would raise another $114 million by increasing the sales tax rate from 5.5 percent to 5.75 percent, the lodging tax from 9 percent to 10 percent, and equalizing taxes on tobacco products with cigarettes.

That plan was quickly rejected by Senate Republicans, as their proposal dedicates an additional $100 million for education funding while repealing the three percent surtax and without raising the sales or lodging tax.

Forest City Dam Update: The Inland Fisheries and Wildlife Committee continues to tackle a bill that allows the state to take ownership of the Forest City Dam located on the East Branch of the St. Croix River. LD 1626 authorizes the Department of Inland Fisheries and Wildlife to oversee the management of the Forest City Project. By taking ownership of this property, it will allow the State to regulate the level of water in East Grand Lake to ensure recreational and habitat-related activities, critical for the residents and economy of the East Grand Lake area of Maine.

In addition to the public hearing held on Tuesday, the Committee met for a work session on Thursday. The Committee will meet once again on Tuesday and hopefully make a recommendation to move forward with the Governor’s proposal.