Throughout most of this legislative session, I have focused my emails on the state budget shortfall of $438 million. In this email, I will give you the most up-to-date revenue forecast, share your responses about revenue ideas, and then give an update on my latest bill.

Children’s Dental Bill
On Wednesday, in the Insurance and Financial Services Committee (my other committee), I introduced LD 1773 “An Act to Improve Dental Insurance Coverage for Maine Children.”

Currently, some dental insurances have age restrictions on when a child is eligible to enroll for dental insurance. My bill attempts to end these age gaps by following the recommendations by most dental associations that all children have their first dental visit by age one. Because this is a possible mandate, the bill would need to be studied on the cost implication.

Revenue Gains
 On Tuesday, the Maine Revenue Forecasting Committee announced that the State of Maine is $51 million above projections in our current two-year budget. Additionally, last week the federal government announced that Maine will be receiving $26.7 million in additional federal Medicare money. This reduces our shortfall to $360 million.

Revenue Ideas and Responses
In my last email, I laid out a few proposals being tossed around for generating new revenues and to help close the steep budget gap. I asked for your opinions on those proposals and encouraged you to send me your ideas. I was thrilled with the response! I heard from a wide variety of folks and gained some great perspective on many issues before the legislature. Today, I’d like to share some of those responses:

Tobacco Taxes
Voters’ responses were almost universally in favor of increasing the tobacco tax to help close the budget gap. There are models that exist to help us calculate the effects an increase in the tobacco tax would have on sales, revenue, and smoking behavior. If we had an $1.00 increase on cigarettes and equalized the tax on loose tobacco and small cigars, we could generate between $44 and $53 million in additional revenue.

One person suggested that the revenue from such a tax be used to help an associated cost:
“…it seems that a tax should be somehow related to a service, and tobacco and local sales taxes might be tied to local health and education services…” – K.S.

Local-option Sales Tax
The response to the local-option sales tax was mixed. Some saw it as a great way to let municipalities pick up some of the funding losses from the state, while others saw it as an additional cost to doing business and a bad move during this down economy.

Personally, I am a supporter of the local-option sales tax because it grants greater autonomy to municipalities and would allow communities like Portland to cover its costs while not raising property taxes.

Sales tax expansion
Some folks suggested that we remove existing exemptions to the sales tax. The legislature has removed a significant number of exemptions for services, while maintaining others (such as ski-lift tickets and golfing).
“Rather than allowing local sales taxes…I’d prefer broadening the state sales tax to include snacks (like potato chips, etc.) and all entertainment tickets, professional fees [lawyers, accountants, hair dressers, holistic-type practitioners (Reiki, aromatherapists, LSW’s doing “counseling,” etc. etc.)]. Rather than continue to starve our society, we should extract more revenue from peripheral, non-essential sources.” – P.G.

Business Taxes
While most folks support raising the tobacco tax, most individuals that responded were against any new broad-based tax on businesses, including incorporation licensing fees.
“Any move toward ‘fees for all Limited Liabilities Companies or Partnerships in the state’ would be a tragic one. As a commercial realtor, I am on the front lines. I work with countless small businesses who struggle enough already in this challenging state. We should be working to free businesses, both big and small from their enormous tax burdens.” – L.N.

Closing
The request for revenue generation ideas was a great exercise. It allowed me to engage with different folks across the District, and listening to your ideas makes me a better elected official. I would encourage everyone to contact me whenever you have a question or opinion on what’s happening in the legislature. Until next time!

-Justin