2015 Final Budget Compromise - Summary

Details of the final compromise between Senate Democrats, House Democrats, Senate Republicans, and House Republicans on the $6.7 billion state budget this session. 

In the House, the original budget out of the Appropriations Committee, LD 1019, passed 101 to 47. The final budget compromise that made changes to that report and finalized by leadership on both sides and in both chambers, passed unanimously during it's first vote avoiding a state government shutdown if the votes hold upon almost certain veto from the Governor. 

Below are some of the key elements to the plan:

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Tax Changes

• Rejects Governor’s huge tax breaks for the wealthy
  
• Tax cut that largely benefits middle and low income families – is fully paid for
  
• Reduces income tax by $140M, with 75% of benefit going to bottom 90% of earners

• Creates a more progressive tax structure with phase outs of standard deduction and itemized deductions for wealthy households:

Current income tax rates for 2015:
$0 to $5,199: 0 percent
$5,200 to $20,899: 5.5 percent
$20,900 or more: 7.95 percent
Tax Brackets for Single, in 2016:
$0-21,050: 5.8% (Standard deduction up to $11,600)
$21,051 - $37,500: 6.75%
$37,501 and higher: 7.15%
Tax Brackets for Single, in 2017:
$0-21,050: 5.8% (Standard deduction up to $11,600)
$21,401 - $50,000: 6.75%
$50,001 and higher: 7.15%

***Note that these brackets are based on taxable income with the new, increased standard deduction and will be indexed for inflation starting in 2018.

• Rejects the Governor’s changes to Homestead Tax Credit, doubles the credit for all families from $10,000 to $20,000; $15,000 homestead for all in property tax year 2016; state reimburses 50% of additional $5,000; $20,000 homestead for all starting in property tax year 2017; state reimburses 75% of additional $10,000
  

• Keeps sales & use tax @ 5.5%; maintains meals tax @ 8%; lodging tax @ 8% until 12/31/15 and then increases to 9% starting 1/1/16.
• Keeps mortgage deduction
  

• Keep itemized deductions but charitable contributions are now counted against the itemized deduction cap

• Refundable Earned Income Tax Credit of 5%
• Increase single standard deduction to $11,600 in 2016, adjust annually for inflation.  
  
• Phase out taxpayer’s deduction (standard or itemized); for single the phase out range is between $70,000 and $145,000 of Maine Adjusted Gross income. The phase out starting point is adjusted for inflation beginning in 2018.
  
• Sales Tax Fairness Credit in budget, reduce credit before phase out 60%, start single phase out at $20,000 instead of $15,000, but phase out at the same rate as in budget.
  
• Military pensions completely exempt; no change to $10,000 retirement deduction
  
• Long-term care premium and Section 529 Plan contribution subtraction modifications eliminated; addition modifications unchanged
  
• Service provider to 6% 1/1/16 and repeal exemption for basic cable and inter-state calls.
  
• Reject Governor's elimination of the estate tax and instead conform to federal estate tax exemption beginning 1/1/16
• Rejects broadening of sales tax, including amusement taxes 
• No Constitutional amendment requiring a 2/3 vote to raise income tax rates
• No changes to BETR/BETE programs
• Sales tax exemption for non‐profit library collaboratives 
• Exempt excise tax on adaptive equipment on motor vehicles
  

Education

• $80M for K‐12 education
  
• $575,000 in each year for Head Start
  
• $28M new higher education funding 
  
• $10M increase to the Maine State Grant Program for college scholarships for Maine workers and students 
  
• $1M for job training
  

Health & Human Services & Welfare Reform

• Protects $48M for DEL/MSP (Drugs for the Elderly program and Medicare Savings Plan)
• Protects $20M in Fund for Healthy Maine 
• Eliminates welfare cliff, ensures child care and transportation funds for TANF recipients
• Increases funding for nursing homes $20.5M
• Increases funding for section 21 waitlist $12M; $1.5M for section 18 waitlist for individuals with brain injuries
• Preserved rates for Sec. 65/28 and medication management for children with behavioral health challenges 
• Rejection of changes in reimbursement for Critical Access Hospitals
• Rejection of the elimination of hospital facility payments
• Rejection of the elimination of methadone treatment
• Rejection of lengthening the time period for disability determinations from 45 to 90 days
• Rejects Governor’s changes for legal non‐citizens
• 3% increase in payments to PNMIs, including adult family care home
• Change reimbursement for non‐emergency use of emergency services
• $3M increase in reimbursement for primary care docs
• $2M/year to increase the salaries of Direct Care Workers performing Personal Support Services in Secs. 19, 63 & 96
• $2M/year for the Shelter Operating Subsidy
• Continue funding Riverview as expanded in the supplemental budget
• Does not include affirmative language protecting asylum seekers
• General Assistance 70% reimbursement to all municipalities ‐ flat funds the GA program. This will make cuts to Portland (approx $1 M per year versus Governor’s cut of $4 M per year) and Bangor (approx. $140,000 per year versus $500,000 per year).
  

Other

• No elimination of forest rangers
• Funding for the Cold Case squad and Computer Crimes Task Force 
• Increased funding for Indigent Legal Defense 
• $200,000 for the testing of wells for the presence of arsenic
  

Get the full language of the state budget compromise: 

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Majority Budget from Appropriations voted 9-4 in Committee (without leadership compromise)

Compromise language amending the State Budget Majority Report