(Photo: Dan Kirchoff)
(Photo: Dan Kirchoff)
Last Thursday, the Maine Legislature passed a supplemental budget package that will provide a full state tax exemption to federal Paycheck Protection (PPP) grants for 28,000 profitable businesses as well as tax breaks on the first $10,200 of federal unemployment benefits for 160,000 unemployed workers.

Republicans initially blocked the two-thirds votes necessary to pass the spending package in order to demand another $32 million in additional business tax cuts, including foreign-derived intangible income, to mirror the federal tax code. However, during floor debate, Republican leaders could not explain which Maine businesses would benefit from the proposal after being challenged by fellow Republican Richard Bennett of Oxford County. Eventually, Republicans gave up the demand after Democrats agreed to put a little more money in the state’s rainy-day fund.

“Democrats were clear from the beginning, we were willing to work with Republicans to pass a compromise supplemental budget that works for Maine people and businesses,” said Senate President Troy Jackson (D-Allagash) in a statement. “My colleagues and I were also clear that we would never get behind lavish tax breaks that only benefit wealthy, multinational corporations. And we held firm. Three-martini lunches and offshore tax havens do nothing for the hardworking people who lost their job due to no fault of their own or the struggling small businesses on Main Street.”

The governor’s original proposal would have counted PPP grants as income, but would have allowed recipients to deduct business expenses like keeping employees on the payroll. However, the governor quickly bowed to pressure from business groups and released what became the final plan, which provides a full state tax break on the first $1 million of PPP funds received.

The supplemental budget package pays for this colossal tax break by using $60 million it had originally proposed for the state’s so-called “rainy day fund” and $20 million from increased federal Medicaid reimbursement rates and various cost reductions. House Republicans claimed a victory.

“Maine employers and their employees rallied to our call and convinced the governor and Democrats in the legislature to see the wisdom of supporting the people who will lead our economic recovery,” said House Republican Leader Kathleen Dillingham (R-Oxford) in a statement. “In the end we commend our Democratic colleagues, the leadership of Speaker Fecteau, and his willingness to listen to achieve a bipartisan result.”

The supplemental budget also includes funding for services for elderly people and individuals with disabilities; the Early College Aspirations program to help high school students receive academic credits for high school diplomas and higher education degrees; and a program to address contamination of “forever chemicals,” such as PFAS, in the environment. All members of the midcoast delegation voted for the bill, except Rep. Jeff Evangelos, who was absent.

Maine House Shoots Down Original Maine Flag Bill

The Maine House voted 91 to 57 to reject a proposal to replace the current Maine flag with the original 1901 Maine flag. Maine didn’t have an official state flag until 1901, when it adopted a design featuring a pine tree and North Star on a buff background. The original flag was replaced in 1909 by a Legislature largely made up of aging Civil War veterans who wanted the flag to look more military-like.

In a floor debate, Rep. Ann Matlack (D-St. George) said she supports going back to the original Maine flag because it’s “colorful, recognizable from a distance and different from almost every state flag.”

“Passing this bill and changing our flag to the 1901 Maine flag will reflect Maine’s unique character,” said Matlack. “The beautiful simplicity and the blue star will be easily recognizable to all across the vast expanse of this state.”

However, opponents argued that the bill was a waste of time and that the current state seal on the flag is perfectly fine.

LD 115 — To restore the former Maine state flag

House (57 Yeas, 91 Nays)
Lydia Crafts (D-Newcastle) N
Scott Cuddy (D-Winterport) Y
Jan Dodge (D-Belfast) Y
Vicki Doudera (D-Camden) Y
Jeff Evangelos (I-Friendship) Y
Valli Geiger (D-Rockland) Y
Jeffrey Hanley (R-Pittston) N
MaryAnne Kinney (R-Knox) N
Michael Lemelin (R-Chelsea) N
Ann Matlack (D-St. George) Y
Genevieve McDonald (D-Stonington) N
Bill Pluecker (U-Warren) Y
Holly Stover (D-Boothbay) N
Stanley Paige Zeigler (D-Montville) Y
X = absent E = excused

Committee Hears Pesticide Regulation Bills

The Agriculture Conservation and Forestry Committee will be voting on two bills that would regulate the use of pesticides. On March 2, Rep. Vicki Doudera (D-Camden) presented LD 316, which would prohibit the use of pesticides containing chlorpyrifos as an active ingredient. Many products, which go by brand names like Roundup’s Bug Destroyer, are available for home use at local hardware stores.

The Maine Medical Association testified in support of the bill, pointing to a Columbia University study that found links between prenatal chlorpyrifos exposure and deficits in children’s working memory and IQ.

However, the Mills administration opposed the bill because it said that pesticide bans should not be done legislatively. Instead, it argued that proposed pesticide bans should be considered by the Board of Pesticides Control, a panel of volunteers appointed by the governor, because it has the experience and expertise to make those decisions.

On the same day, Senate President Troy Jackson reintroduced a measure (LD 125) to ban aerial spraying of glyphosate or other synthetic herbicides on woodlands. In a statement, Jackson, said that loggers like him have seen the damage that aerial spraying has caused to the local ecosystem, wildlife, neighboring lands, drinking water and the health of the people working in the Maine woods.

“Now, reports of the harmful effects of glyphosate and other synthetic herbicides — on top of thousands of lawsuits and bans across the globe — have confirmed our suspicion,” said Jackson. “The use of aerial herbicides in the Maine woods benefits the bottomline of large landowners at the expense and well-being of the people living and working in the region.”

At the hearing, Maine Forest Service Director Patty Cormier said her agency opposed the bill because aerial spraying is an “efficient and effective method” and that the amount of pesticide used has been “substantially reduced.”

“Banning aerial herbicides will likely result in landowners moving to ground application, which is manually intensive, has a potential for greater ecological ground disturbance, and requires multiple applications with a higher potential for site disturbance,” she wrote.

The committee will likely vote on both bills Tuesday, March 16.

Republicans Seek to Increase Virtual Charter Schools

The Legislature’s Education Committee heard two Republican bills to lift the cap on student enrollment at all virtual charter schools on March 3. Virtual schools are privately run online schools that are publicly funded, but overseen by an unelected nonprofit board. Currently, Maine has two virtual schools, Maine Virtual Academy (MVA), which is operated by for-profit company K12 Inc., and Maine Connections Academy (MCA), which is run by education giant Pearson. Both schools are funded by school districts where the students live, as the law allows per-pupil funding to follow students who attend charter schools.

Speaking in favor of the bill, MCA Board Chair Amy Linscott said that virtual schools can be a good alternative for students who don’t fit in traditional schools and need “an alternative to our ZIP-coded educational system.”

“Placing the cap on virtual public charter schools took this important education option away from children that needed it, as MCA had to place students on a wait list last year and this year,” she said.

However, opponents of the bill pointed to a 2020 Maine Charter School Commission evaluation which found that the state’s two virtual schools had the lowest mastery rates measured in GPA and the lowest graduation rates in the state, at 58% and 60%.

“Both bills before you will only serve to further destabilize funding for public schools and cause more uncertainty in student populations,” said John Kosinski of the Maine Education Association. “Our public schools need stability and support — not the further siphoning of students, especially to for-profit charter schools, and the subsequent reductions in state funding.”

Funding to Support Frances Perkins Center

The Education Committee is also considering a measure (LD 440), sponsored by Sen. Chloe Maxmin (D-Lincoln County), that would provide $100,000 to support the Frances Perkins Center in Newcastle. The money would be used to leverage a $500,000 “Save America’s Treasures National Park Service” grant so the center can provide public access to the landmark and provide “a place-based education and outdoor history center” for future generations.

“The Perkins family homestead is an important Maine landmark,” said Michael Chaney, executive director of the Frances Perkins Center, “not only for helping to document how this place inspired the nationally significant leader of Frances Perkins, but also to tell the story of how generations of a single family made a living in midcoast Maine starting in the mid-1750s, before Maine was even granted statehood in 1820, through to 2020 when the property transitioned from Frances Perkins’ sole heir to our nonprofit organization.”

Frances Perkins was President Franklin D. Roosevelt’s secretary of labor and created such New Deal reforms as the Wagner Act, which gave workers the right to organize unions and bargain collectively, and the Fair Labor Standards Act, which established for the first time a minimum wage and a maximum workweek for men and women.

Evangelos Proposes Bill to Create Unjustly Incarcerated Persons Compensation Fund

The Judiciary Committee is considering a measure (LD 478) that would establish a special fund to compensate people who were unjustly incarcerated. The proposal, sponsored by Rep. Jeff Evangelos (I-Friendship), would provide $50,000 per year of unjust incarceration and $10,000 for each year that the person eligible for compensation was required to register as a sex offender.

Evangelos submitted a similar bill last session, which passed a committee vote, but died without a floor vote when the Legislature went home due to the pandemic. In testimony, Evangelos cited a National Registry of Exonerations report that found police and prosecutor misconduct “contributed to false convictions in 54% of exonerations.” Evangelos noted that the current law does allow for compensation of unjustly incarcerated individuals, but the requirements are too onerous, as the convicted person must obtain a formal pardon from the governor as well as file an action in Superior Court, which they are unlikely to be able to afford.

“When the committee completed its research in 2020, it was discovered that no Maine person has ever succeeded in overcoming these burdens: no exonerations, no pardons, no money,” said Evangelos. “Additionally, the current law has a damage cap of $300,000. So a person who was unjustly imprisoned for 30 years receives just $10,000 for each year, hardly a recipe for justice. Maine’s current law ranks our state near the bottom in adjudicating a fair and reasonable outcome.”

However, the Criminal Law Advisory Commission (CLAC) opposed the measure, arguing that it may “constitute the equivalent of a pardon, and thus, a violation of separation of powers by impinging on the governor’s pardon power.” CLAC members also questioned the process outlined in the bill to determine whether an individual is truly innocent.

Curry Proposes Unemployment System for Gig Workers

Sen. Chip Curry (D-Waldo County) has introduced a bill (LD 425) that would direct the state to create an unemployment compensation system for self-employed workers and independent contractors. In testimony, Curry pointed out that self-employed workers make up 10% of the labor force in Maine and 17.4% in Waldo County, compared to 6% nationally. Without federal Pandemic Unemployment Assistance, those workers would have been left without any safety net during the pandemic

“Unemployment for self-employed workers and independent contractors isn’t just a problem that we’re facing today during the COVID-19 pandemic,” he wrote. “How we work is changing. We’ve seen the number of gig workers surge 15% in the past decade, demonstrating broad economic and demographic shifts in our workforce. As the gig economy continues to grow, so too must our unemployment and social safety net programs.”

The bill was supported by the Professional Logging Contractors of Maine, which pointed out that loggers and truckers in the forest products industry have been hit hard by the loss of paper mills, the idling of wood biomass facilities and COVID-19. But they can’t qualify for regular unemployment because they are classified as independent contractors.

Laura Boyett of the Maine Department of Labor opposed the bill, noting that federal law prohibits self-employed individuals and independent contractors from receiving benefits under the regular state unemployment program. The only exception is an incorporated business where the owner is legally an employee of the business and unemployment taxes are paid on the wages received from the corporation.

“Based on current federal law, to accomplish what this resolve seeks to do would require a separate unemployment program, trust fund and funding mechanism — both to cover the cost of the benefits paid out as well as the administrative costs associated with delivering these services,” said Boyett.

Increasing Real Estate Transfer Taxes

Rep. Lynne Williams (D-Bar Harbor) has submitted a bill (LD 418) that would change the real estate transfer tax from a flat tax to a graduated tax by adding a new tier for homes priced above $500,000. Currently, 45% of RETT revenue is distributed to the Maine State Housing Authority’s HOME Fund for affordable housing; 45% goes to the state; and 10% goes to county registries of deeds.

Williams said she proposed the bill because she realized Maine’s rate of the RETT is one-third that of both New Hampshire and Vermont.

“Even a modest rate increase in the Real Estate Transfer Tax will go a long way to fund programs to aid low-income renters, and it will do so without harming Maine’s real estate market and without requiring the use of general revenue funds,” said Frank D’Alessandro, the litigation and policy director of Maine Equal Justice.

He argued that the best way for the bill to have an impact on housing affordability was to direct the proposed revenues for rental assistance. According to the National Low Income Housing Coalition, Maine had a shortage of over 22,000 affordable homes before the pandemic. Among Maine renters, 73% of those earning less than 30% of the Area Median Income paid more than 30% of their income on housing and over half paid more than half of their income on housing.

Aaron Bolster of the Maine Association of Realtors said his organization opposed the measure because Maine’s economy is “fragile.”

“This is not the time to disrupt the real estate industry with tax adjustments,” he said. “I remind you that for many Mainers, the real estate transfer tax is a ‘catastrophe’ tax. Property is being bought and sold due to divorce, death, bankruptcy, medical emergencies, or a business closure or failure. We have seen more of this due to COVID in our communities.”

Maxmin Proposes Green Amendment for Maine

Sen. Chloe Maxmin has submitted a “Green Amendment” to the Maine Constitution that would guarantee the “right to a clean and healthy environment and to the preservation of the natural, cultural, recreational, scenic and healthful qualities of the environment.” Maxmin was joined at a public hearing by several climate activists from around the state who testified in support of the bill.

“Breathing clean air is the most basic of human needs, followed by access to clean drinking water. These must be human rights, for everyone. Our state constitution must reflect this,” wrote Hallie Arno, an activist from Lincolnville with the group Maine Youth for Climate Justice (MYCJ). “Furthermore, we must look beyond today and guarantee these rights for future generations, and the only way to assuredly safeguard this right is by ensuring the health of the ecosystems that support all life on this planet.”

Not surprisingly, Ben Gilman of the Maine State Chamber of Commerce opposed the bill because he feared it could lead to more lawsuits against businesses.

Committee Hears Bill to Restore Revenue Sharing

The Taxation Committee is considering a number of bills to fully restore revenue sharing by increasing the amount of tax revenue sent to town and city governments from 3.75% to 5%. Supporters of fully restoring revenue sharing have pointed out that cutting it has forced municipalities to cut services and raise property taxes to make up for the loss in revenue.

“As a mayor, I saw firsthand the devastating impacts that the then-decade-long underfunding of revenue sharing had on our communities, our property taxpayers, the services we could provide to our friends and neighbors, our municipal employees, our local economies, our schools and our public safety departments in Gardiner and throughout Maine,” said Rep. Thom Harnett (D-Gardiner), one of the bill’s sponsors.

But the Mills administration opposed the measures because it would cost the state $38 million over the next few years. The committee will take up the bill again on Thursday, March 18.

Raising Taxes on Profitable Corporations

Last week Rep. Heidi Brooks (D-Lewiston) presented LD 501, which would increase the income tax rate on corporations in the top income tax bracket from 8.93% to 12.4%. Maine cut corporate taxes in 2018 by raising the threshold for the top rate from $250,000 in profits up to $3.5 million.

Speaking in favor of the bill, Sarah Austin of the Maine Center for Economic Policy said that the measure would raise about $78 million in revenue each year to invest in schools, communities, health care and other priorities.

“LD 501 asks highly profitable corporations, those that have done well even through a global pandemic and economic crisis, to pay a little more to help Maine rebuild our local communities and invest in the families that have been hurt the most,” she said.

Business groups and the Mills administration opposed the measure.

“Maine currently has the seventh highest top marginal tax rate,” said Michael Allen, associate commissioner for tax policy in the Maine Department of Administrative and Financial Services. “The increase to 12.4%, roughly a 40% change, would put us highest in the nation. The administration does not support these tax increases.”