Here are the details about that $6.7 billion budget deal

Here’s the first thing you should know about this deal: The lawmakers who crafted the plan didn’t want you to know about it.

The leaders of the Legislature announced last night that they had signed off on a budget deal, but released no details. This morning, reporters were told part of the agreement was that details be kept close to the vest for as long as possible.

The problem? The plan is to pass the budget and send it to the governor today.

So the agreement — struck by House Speaker Mark Eves, D-North Berwick; House Minority Leader Ken Fredette, R-Newport; Senate President Michael Thibodeau, R-Winterport; and Senate Minority Leader Justin Alfond, D-Portland — would have kept the public in the dark about what’s in the roughly $6.6 billion budget deal that will dictate state spending for the next two years.

State House reporters pressed this morning for details of the plan, only to be told, originally, that we’d learn about the plan after the first vote. Lawmakers used the “closed party caucus” loophole in the state’s public meeting law in an effort to keep reporters away from meetings of legislators where details may have been discussed.

The press corps was up in arms at that point and, if you ask my opinion, fear of bad press was the only reason the the leadership backed off from their silence pact and released the information below.

I’ll leave it to you to decide whether that is transparent government. On to the details of the plan.

The budget will require two-thirds approval in both chambers, and must be passed into law by the end of the month to avoid a government shutdown.

I’ll be updating this blog post with details as I receive them.

UPDATE 1: The cornerstone of the plan is a $71 million net tax cut over the course of the biennium. That’s achieved through a big income and property tax cuts, tempered partly by an increase in the sales tax.

The bulk of the cuts — roughly 75 percent — are distributed among the bottom 90 percent of earners in the state. Roughly 580,000 Maine families would see their overall tax burden decrease, while about 117,000 families would see a tax increase.

For those of you who love documents, here’s the distributional analysis of the bipartisan deal, and here’s the fiscal note, both prepared by Maine Revenue Services.

UPDATE 2: Here is the text of the amendment that represents the leadership agreement. The amendment was posted online several hours after the kerfuffle described above, and as of 3:21 p.m., was being circulated to lawmakers.

UPDATE 3: Adjusted the headline to reflect new estimates of the total budget cost.

  • Income tax cuts:
    • Current law: Maine’s personal income tax system currently has two brackets: Income from $5,200 to $20,900 is taxed at 6.5 percent, while income above $20.900 is taxed at 7.95 percent.
    • Budget deal: A new tax bracket is added, and the so-called “zero” bracket (from $0 to $5,200) is eliminated. By 2017, the brackets will look like this:
      • $0-$21,400 — 5.8 percent.
      • $21,400 – $50,000 — 6.75 percent.
      • $50,000+ — 7.15 percent.
  • Tax credits/deductions:
    • Because of the nature of the income tax, broad cuts have a bigger impact on the wealthy than the low-income. So this is where Democrats focused their efforts to ensure tax cuts focused on middle- and low-income families. I don’t have all the details (I’ll post them when I do), but here you go:
    • The Standard Deduction will increase. For single filers, it’s up to $11,600 in 2016, adjust annually for inflation.The current standard deduction for single filers is only $6,200. The deduction will phase out between $70,000 and $140,000.
    • Phase out taxpayer’s deduction (standard or itemized); for single the phase out range is between $70,000 and $145,000 of Maine Adjusted Gross income. The phase out starting point is adjusted for inflation beginning in 2018.
    • Of particular note, the Earned Income Tax Credit will grow, and will become refundable, as is its federal counterpart
  • Sales tax changes:
    • Current law: Currently, would see the state’s general sales tax fall from it’s current level of 5.5 percent to the pre-2013 rate of 5 percent rate on July 1. Similarly, the meals and lodging tax will fall from its current 8 percent rate down to a previous rate of 7 percent.
    • Budget deal: The sales tax will remain at 5.5 percent. Meals and lodging tax will be split, with the tax on restaurants and other prepared foods staying at 8 percent, and the tax on motels and hotels rising to 9 percent in 2016. The deal also includes a new Sales Tax Fairness Credit for low income Mainers, to offset the regressive nature of sales tax increases. All single filers will receive a $125 credit, all joint filers a $250 credit.
  • Military pensions:
    • Current law: No income tax exemption.
    • Budget deal: All military pension payments are exempt from income taxation.
  • Estate tax:
    • Current law: The first $2 million worth of large inheritances is exempt from the estate tax.
    • Budget deal: Brings Maine’s exemption in line with the federal level, which is $5.5 million.

Here’s where other contentious issues ended up:

  • Municipal Revenue Sharing will remain at the current rate of roughly $62 million per year.
  • The Homestead Property Tax Exemption, currently capped at $10,000, will increase to $15,000 int he first year of the biennium and $20,000 in the second year.
  • School funding for K-12 education will increase above current levels by $40 million in each year of the biennium.
  • The deal is silent on the issue of General Assistance for asylum seekers. Democrats wanted to amend the state’s GA law to protect such legally present asylum seekers from getting caught in the Republican’s efforts to take welfare benefits away from “illegal immigrants.” The issue will be decided in a vote on an amendment separate from the budget.
  • Legally present noncitizens, including those asylum seekers, will be subject to a new eight-month cap on TANF, SSI and food stamp benefits, unless they are eligible for a hardship exemption.

Here’s what staff of the four leaders told us on welfare reform. I’m working to get more details, but this is what we have so far:

  • The deal removes the top cap on Temporary Assistance for Needy Families, eliminating the so-called welfare “cliff” and encouraging work without fear of losing benefits.
  • Changes formula for General Assistance program at a 70 percent reimbursement to all municipalities.
  • Increases funding for nursing homes; section 18 brain injury waitlist; increases funding for PNMI’s from 3% to 4%, and increases funding for section 21 intellectual disabilities waitlists.
Mario Moretto

About Mario Moretto

Mario Moretto has been a Maine journalist, in print and online publications, since 2009. He joined the Bangor Daily News in 2012, first as a general assignment reporter in his native Hancock County and, now, in the State House. Mario left the BDN in 2015.