AUGUSTA — Maine legislative leaders and Gov. Paul LePage on Tuesday were closing in on a bipartisan compromise combining federal tax conformity with $15 million in school funding.
Senate President Mike Thibodeau, R-Winterport, and Senate Minority Leader Justin Alfond, D-Portland, said legislative leaders from both chambers agreed on that potential framework, are presenting it to members and could vote on it as soon as Wednesday.
The Republican governor said Tuesday in a radio appearance on WVOM that he expects to sign a tax conformity bill this week, which would end a political stalemate over a usually mundane issue — Maine’s compliance with changes in federal tax law.
LePage’s conformity plan includes $38 million in annual tax credits and deductions for businesses and residents, which he has called crucial for improving Maine’s reputation as a business-friendly state.
But Democrats have been lobbying for $23 million in education funding to offset projected cuts in funding for the upcoming school year and have asked for the phase-out of the Maine Capital Investment Credit, which allows upfront tax breaks on business property that will lessen in value over time.
The governor has been hammering Democrats on the issue, criticizing them for holding conformity for “ransom.” Earlier this month, he said he wouldn’t support conformity if it was tied to more spending.
But nobody got all they wanted: Thibodeau and Alfond said the proposal combines full conformity — including the capital investment credit — with $15 million in education funding, plus a Blue Ribbon Commission to study education performance and spending.
Alfond said negotiations between legislative leaders and the governor’s office included “a lot of different discussions” around conformity.
LePage said the education money will come from Maine’s rainy day fund, and he struck a more conciliatory tone Tuesday on the issue, saying, “I’d like not to be OK” with the new spending, but it was “the only way” to get conformity done.
He also said the commission will give Acting Education Commissioner Bill Beardsley a chance “to find out where we can make the improvements” on becoming more efficient with education spending and improving performance.
“I see it as a fair compromise given all the parties that have interest in the bill,” Thibodeau said. “It’s a way to get conformity done and yet is a recognition that people also think that education funding is important in a separate bill.”
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