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AUGUSTA, Maine — A compromise budget deal inked by the Maine Senate hit a wall in the House of Representatives on Thursday as Republicans withheld their votes in a push for more business tax cuts.
The move forced the Legislature back into negotiations facing a tax cliff. Many businesses that received federal coronavirus aid have a Monday filing deadline. Lawmakers agreed to fully forgive taxes on federal Paycheck Protection Program loans and exempt the first $10,200 in enhanced federal unemployment benefits for Mainers, but both will die with no deal.
The $258 million package featuring both pandemic cost-cutting and spending has been held up by an ongoing debate between majority Democrats and minority Republicans over how much Maine should adhere to federal tax law. They are roughly $32 million apart as conservatives push to insert a slate of relatively obscure and narrow federal tax breaks into the state code.
A lengthy ream of Republican amendments were voted down by Democrats in the House on Thursday ahead of a 82-64 vote on the package. The majority party would need 98 votes to meet the two-thirds threshold ultimately needed to pass the package.
It clearly frustrated Democrats, who won the votes of two Senate Republicans late Wednesday after agreeing to a measure from Sen. Brad Farrin, R-Norridgewock, that secured $113,000 in veterans services funding that Gov. Janet Mills was trying to cut from the short-term budget.
Sen. Cathy Breen, D-Falmouth, the co-chair of the budget committee, expressed frustration over the vote, saying she did not understand why Republicans held the line after Democrats conceded on loan relief. She pointed specifically to an $8.4 million foreign income tax break that would benefit an estimated 10 or fewer businesses here.
“It just seems like a talking point with no substance,” she said.
Rep. Sawin Millett, R-Waterford, a key budget committee member, pleaded during floor debates for both parties to seek a similar compromise to the one between Democrats and Farrin.
“No one would disagree that we have an obligation to everyone in our communities whose lives were turned upside down during the calendar year,” he said. “And the more we can do to utilize the one-time sources available to us today, the better we will be able to go back home today and say, ‘We tried to help.’”
The defeat of the measure sets up a long day of negotiating and an uncertain outcome to the standoff, which neither party wants to last long enough for businesses to see negative effects. The pandemic loan tax cut amounts to $100 million, while the one for Mainers who have been unemployed would cost the state $47 million.
The long series of votes were the first of 2021 as the pandemic has changed legislative operations. They were also under the gun with only Wednesday and Thursday booked at the center with MaineGeneral Health taking the city-owned civic center back on Friday to resume COVID-19 vaccine clinics, adding to the time pressure.