Janet Mills' new budget offer sparks debate on what counts as tax relief

May 17—Good morning from Augusta. The Legislature's natural resources committee will hear a bill today meant to prevent out-of-state trash from being dumped at the Juniper Ridge Landfill in Old Town. Follow along at 9 a.m. here.

QUOTE OF THE DAY: "I look forward to being back at work in Washington as soon as my responsibilities to my family allow," said U.S. Rep. Jared Golden of Maine's 2nd District. His wife, Isobel, had their first child, Rosemary, over the weekend.

What we're watching today

What counts as tax relief is already becoming a major talking point in the second round of two-year budget talks. Gov. Janet Mills' adjusted two-year budget proposal is 5 days old and will have to work relatively quickly through the Legislature if lawmakers want to be out of the State House at their originally scheduled exit in a month. There are places where Republicans and Democrats agree, but key philosophical differences on how to give taxpayers recovering from the coronavirus pandemic a break have emerged.

Mills has framed her goal to pay 55 percent of Maine's K-12 public education costs — the hallmark of her $8.8 billion budget proposal — as tax relief because it will shift some of the burden of schools from municipalities to the state. It is a long-awaited moment for the state after a 2004 referendum that set the cost-sharing amount 17 years ago and another 2016 vote that established a tax on high-income Mainers to pay for it that was given away in budget talks.

That does not come with an ironclad guarantee, however, that property taxes will go down by a corresponding amount as cities and towns look to save services while also waiting for federal aid. Another piece that is not direct tax relief but could be if cities and towns pass it on would be Mills' proposal to increase municipal revenue sharing to 5 percent by 2023. Other key tax elements of her budget include a boost in the Property Tax Fairness Credit.

Maine's budget department put a $174 million price tag on the budget's direct tax proposals and $187 million on school cost sharing. Republicans are pushing for more. While they also backed the revenue sharing increase, they want to increase the homestead exemption from 70 percent to 100 percent while giving taxpayers the same $10,200 income tax break lawmakers gave to those who collected unemployment due to the pandemic.

These philosophical differences are not surprising: Republicans have been doubtful of how effective increasing education spending on the state level will be and view their proposal as helping everyone. Democrats have said relief should be targeted and that the historic amounts of federal aid and revised revenue projections coming into the state should be used ambitiously.

The conversations could get tense. Rep. Patrick Corey, R-Windham, called the initial budget passed on party lines a "sloppy document that is now in need of fixing in a budget sequel" in a Friday radio address after Republicans largely reserved judgment on the proposal last week. They are expected to outline their proposals more at a 12:30 p.m. press conference today.

The Maine politics top 3

— "Maine will allow vaccinated people to stop wearing masks indoors starting May 24," Jessica Piper, Bangor Daily News: "As of Friday, more than 621,000 Mainers had received their final dose of the COVID-19 vaccine, while more than 687,000 have received at least one dose. Vaccination rates vary widely by age group, however, and children under the age of 12 are still not eligible for the vaccine. The change in masking policy only applies to Mainers who are fully vaccinated, meaning it has been at least 14 days since they received their final COVID-19 vaccine dose." Here's your soundtrack.

The change does not mean the private sector will drop mask requirements all at once. Only 44 percent of Mainers will meet the state's definition of fully vaccinated by May 24, according to state data. Some businesses, such as Hannaford, have indicated they are likely to keep up mask requirements in the short term rather than rely on an honors system or force retail workers to ask customers whether they are fully vaccinated.

— "Higher pay alone isn't luring back thousands of lapsed Maine restaurant workers," Lori Valigra, BDN: "Maine's hospitality industry is short about 16,000 workers now, prompting HospitalityMaine to launch a recent $125,000 campaign to bring those who left back. The situation in Maine is playing out nationally. Some 8.1 million jobs were open as of the end of March, the highest number since December 2000, according to the U.S. Bureau of Labor Statistics. Of those, 519,000 were in accommodation and food services."

— "County official says he won't step down and vows to fight criminal charges," Judy Harrison, BDN: "[John Hiatt] ... said Sunday that on the advice of his attorney, Harris Mattson of Bangor, he would not address the charges directly. Hiatt claimed that he is the victim, not the woman."

Today's Daily Brief was written by Caitlin Andrews, Jessica Piper and Michael Shepherd. If you're reading this on the BDN's website or were forwarded it, you can sign up to have it delivered to your inbox every weekday morning here.

To reach us, do not reply directly to this newsletter, but contact the political team at mshepherd@bangordailynews.com, candrews@bangordailynews.com or jpiper@bangordailynews.com.