AFA Update: Week of March 6-10- ENR, IFS, EUT, Tax, Retirement, Judiciary and ACF

Appropriations

Public hearings on the governor’s proposed budget wrapped up this week.

Environment and Natural Resources

Insurance and Financial Services

Energy, Utilities and Technology (US Broadband info)

Taxation

State Retirement– The most discussed and well attended hearing. The administration made it clear that the proposal to suspend cost of living adjustments (COLAs) for retirees is intended to make additional payments on the unfunded actuarial liability (UAL) that are currently unnecessary.

Judiciary

Agriculture, Conservation and Forestry

Members of the committee expressed great skepticism at the changes proposed by the governor’s budget in the Department of Agriculture, Conservation and Forestry. “Not going to fly” was one comment.

Next Week

AFA holds public hearings on a handful of bills related to the retirement system. At the end of the week Rep. Farrin’s bill to eliminate benefits for Legislators will be heard.

Taxation

In addition to its regular workload Tax started discussions about the governor’s proposed budget.

Maine Revenue Services (MRS) and the Office of Policy and Management (OPM) delivered an array of materials:

OFPR tax documents

OPM “impact” of question 2

OPM staff estimate that in the first year of the new policy-

  • Private sector employment will be negatively impacted by 2,400-4,300
  • Real disposable incomes will be negatively impacted by $400- $600 million
  • Maine’s population will decline by 800- 1,400
  • GDP will be negatively impacted by $40-$160 million

These estimates are based on an economic forecasting model. Models are only as good as the data provided to them. In this case every result is based on how many people OPM assumes will leave the state. They have not yet provided an explanation of the basis for those beliefs. Others presented research refuting “tax flight”.

MRS analysis of 3% surcharge– includes a distributional analysis

MRS provided answers to questions posed at the public hearing.

History of tax changes 2011-today

MRS Background materials for governor’s tax proposals– includes distributional analyses

MRS revenue estimates

MRS tax plan vs 3%

Next week

Tax is scheduled to report back to AFA on April 3. Next week is dedicated to work sessions on the proposed budget.

 

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