MSBA Legislative Update 01-16-09

MAINE STATE BAR ASSOCIATION

LEGISLATIVE AND REGULATORY WEEKLY REPORT

LEGISLATIVE

TAX REFORM UNDER DISCUSSION

Rep. John Piotti (D-Unity) in a presentation to the Portland Chamber of Commerce, discussed his hopes for achieving tax reform during the first session of the 124th Legislature. Rep. Piotti is the former House chair of the Taxation Committee, and is now the Majority Leader in the House. He explained a bill proposing tax reform will be introduced in the next few weeks with the goals of:

Lowering the income tax rate;
Exporting some of the tax burden away from Maine citizens;
Stabilizing revenues by expanding the sales tax base to more items;
Increasing the meals and lodging tax to 8%;
Increasing the tax on certain sales of soda and snack food; and
Including a tax credit to benefit Maine residents.

Rep. Piotti indicated he is hopeful that such a reform package will have the support of the members of the business community and will be enacted by the Legislature by early spring.

Of specific interest to MSBA was Rep. Piotti’s answer to a question regarding tax on professional services. He stated that he had no intention to propose a tax on professional services that would include legal services. He explained that many legal services are portable, and thus a policy which encouraged people to change from Maine-based service providers to those based in other states in order to avoid a sales tax made no sense.

BIENNIAL BUDGET RELEASED

Gov. Baldacci has released his proposed biennial budget, which seeks to close the $800 million deficit gap of the $6 billion two-year budget. The budget contains a number of state employee position cuts, contains a number of reductions to certain tax incentive programs, including a 10% reduction in the Business Equipment Tax Reimbursement Program, increases certain marine and fishery related license fees, and contains a $98.9 million placeholder in anticipation of receiving federal economic stimulus revenues.

Of specific interest to MSBA are the proposals impacting the Judicial Branch budget. Gov. Baldacci has proposed a $1.8 million increase in monies available for indigent defense services, and has proposed an overall $6 million increase for the Judicial budget. It includes debt-service for certain courthouses, and provides maximum flexibility to the Judiciary to manage any decreases in revenues that are necessary.

The Appropriations Committee and the Judiciary Committee will be receiving in-depth information regarding the budget proposals and will shortly start discussions and deliberations regarding the ultimate recommendations for funding in the biennial budget.

LEGISLATIVE DATABASE

An updated legislative database is attached to this weekly report for your information. It contains any newly introduced bills that we have identified of interest to the MSBA, along with updated status listings of previously introduced bills.

Click here for your Legislative Database.

Click here for a text document of this report.

As always, please don’t hesitate to contact us if you have any questions:
Pattie Aho at 207-622-6311 or paho@piereatwood.com