Maine Pandemic Tax: Gov. Mills’ allies vote down proposal to remove tax from state budget

Gov. Janet Mills speaks at a ribbon cutting for a new electric vehicle charging station, one of many new spending initiatives Gov. Mills implemented before the pandemic.

AUGUSTA – Late Thursday night, news broke that Governor Mills’ Democrat allies on the Maine Legislature’s Taxation Committee are not ready to let go of Mills’ budget proposal to tax the pandemic aid loans sent to Maine’s employers through the federal PPP program.

The vote came after Republicans on the committee, led by Rep. Ted Kryzak (R-Acton) moved to have the Joint Standing Committee on Taxation formally remove the tax from Mills’ budget proposal and adopt the same approach as the federal government, relieving Maine businesses from the tax burden.

Some had warned that Mills’ statement earlier in the week that she would look for another solution was not a promise the fight on the controversial tax was over.

In a statement, the executive director of the non-profit group Maine People Before Politics, Julie Rabinowitz, warned that Gov. Mills had only said she “may reverse” the proposal to tax pandemic aid, and that Mills had “not yet committed” to change direction, only suggesting she would look at it.

Mills statement, MPBP said, “does not include any specifics or recommend spending cuts.”

Rep. Kryzak, who serves as the Ranking Member for House Republicans on the Taxation Committee, said, “The idea that the Governor wanted to capture this money in state revenue instead of allowing Maine’s businesses to use it as intended by Congress is a disservice to the people of Maine. That is why I felt it was important to report to the Appropriations Committee that at least the Republican members of the Tax Committee support protecting businesses from this tax.”

The Taxation Committee voted along party lines to leave Mills’ proposal to impose more than $100 million in taxes on the PPP pandemic aid loan in the state budget, for now.

Other Republicans on the committee also weighed in.

“People need to understand that businesses have to survive in order for people to get their jobs back and our state to recover,” said Rep. Bruce Bickford (R-Auburn). “The Appropriations Committee needs to review the overspending that occurred before the pandemic and then prioritize job preservation and creation going forward.”

“Governor Mills proposed taking an estimated $125 million in federal relief away from Maine businesses, then backtracked when it was universally unpopular,” said Rep. Mickey Carmichael (R-Greenbush). “Today Republicans tried to send a message that businesses and their workers need relief, without delay or budget gimmicks.”

Most states have adopted policies to ensure they treat the pandemic aid loans in the same way the federal government does, taking a hands off approach while the businesses that received the funds struggle back to their feet.

In Maine, however, Governor Janet Mills’ push for spending increases of more than $1.2 billion in her first year has been the driving factor in a massive state budget shortfall. Mills’ spending increase was built on aggressive projections of record-breaking revenue that never materialized in the actual economy.

It is unclear when the Legislature’s Taxation Committee will have the opportunity to consider removing Gov. Mills’ pandemic tax again, but one thing is certain – those opposing the pandemic tax are far from declaring victory.

For readers interested in the specific lawmakers involved in the Taxation Committee’s party line vote, following are the legislators who serve on the committee:

Democrats (voted against motion to remove the pandemic tax):
Senator Ben Chipman (D-Portland); Senator Matthea Daughtry (D-Brunswick); Rep. Maureen Terry (D-Gorham); Rep. Benjamin Collings (D-Portland); Rep. Lori Gramlich (D-Old Orchard Beach); Rep. Ann Matlack (D-St. George); Rep. Joe Perry (D-Bangor); Rep. Melanie Sachs (D-Freeport).

Republicans (voted for motion to remove pandemic tax):
Senator Matt Pouliot (R-Augusta); Rep. Ted Kryzak (R-Acton); Rep. Bruce Bickford (R-Auburn); Rep. Micky Carmichael (R-Greenbush); Rep. Jeff Hanley (R-Pittston).

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