By Michael Shepherd - July 6, 2022
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Good morning from Augusta. There are 125 days until Maine's November elections.

What we're watching today

Maine's former governor has changed his tax strategy, but his plan would leave many budget issues to sort out. After talking about the idea for years, former Gov. Paul LePage kicked off his Blaine House return bid just over one year ago. It began in earnest with a September rally in Augusta, where he renewed an old push to eliminate Maine's income tax, a white whale of his eight-year tenure.

The problem with getting rid of the income tax is that it is the dominant source of revenue for state government. Last year, it was expected to generate 44 percent of the state budget at $1.8 billion. In his first term, he pushed through a major income tax cut under one term of Republican control of Augusta. But when he tried to phase out the income tax by bringing down top rates and then offsetting those changes by raising and broadening the sales tax, it kicked off a war between LePage and Senate Republicans. The idea went nowhere.

He is proposing a different path this time, saying in radio appearances and speeches that he plans to start by first eliminating taxes on senior pensions now exempt up to $35,000. After that, LePage says he would increase exemptions for others from the bottom up until the income tax is phased out, framing it in a Tuesday interview with WVOM as a response to Democratic criticisms of his prior tax proposals being aimed at the rich. At the same time, he said he wants to eliminate the estate tax, which would only affect a small amount of families with assets above $6 million.

LePage has not said exactly how he would offset the plan to start. He and other Republicans have said the two-year budgets passed under Democratic Gov. Janet Mills have been too high, which would indicate some preference for spending cuts. Federal aid has left the state flush with record reserves. Using that to fund tax cuts relies on rosy ongoing forecasts that LePage has not shared. While the estate tax has topped out at around $40 million in recent years and may be able to be ended in a two-year budget, the senior pension changes would be bigger. Deep changes would assuredly need offsets.

There are past clues in how LePage might approach that. His last budget proposal in 2017 was criticized by the liberal Maine Center for Economic Policy, which said it would raise taxes on 80 percent of Mainers when taking all of the income, sales, property and other tax changes into account. It was accompanied by $140 million in health department cuts largely affecting MaineCare and cash assistance.

Previewing the campaign ahead, the Maine Democratic Party has pointed to past plans to say LePage would likely send other taxes "through the roof," while he has pitched a unified Republican strategy to take over the State House.

"We intend to win the House, the Senate and the governorship and we are planning to fix Maine once and for all," he said on Tuesday.

A shift away from income taxes to other taxes or more cuts would lead to a huge policy debate in Augusta even if Republicans were immediately on board, unlike the last half of the LePage era. They would need legislative majorities for the idea to be entertained. For now, neither that nor LePage victory is assured. The math of this proposal also needs a lot of fleshing out.

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News and notes

Maine is part of a trend that could worsen inflation if it grows.

— I'm talking about the $850 stimulus checks that have now mostly gone out to nearly 860,000 Mainers, which originated with legislative Republicans and was cribbed by Mills. It comes alongside similar programs in other states intended to offset effects of inflation. California's $17 billion package is the most notable.

— One analyst tells Axios the state-level programs have likely had a negligible effect, but if most states did them, they would make inflation harder to control nationally. The flip side is that throwing generally robust state surpluses at other things — like construction projects — could also worsen supply issues.

— Mills and LePage have divided on the relief checks, with the former governor calling them inflationary. He has suggested suspending the gas tax, an idea that the conservative Tax Foundation has said would also exacerbate inflation if done across the U.S. economy. The truth is that Maine alone cannot do much to tamp down or worsen inflation, but it can be part of trends that do.

Polling from Texas could provide clues on how a gun bill plays in Maine.

— Sen. John Cornyn, R-Texas, took only a mild hit in his state after rankling the base by negotiating the bipartisan gun, mental health and school safety bill that passed Congress last month, Morning Consult found. His approval dropped from 67 percent to 61 percent among Republicans after the passage.

— The two candidates in Maine's 2nd Congressional District have divided on the measure, with Democratic Rep. Jared Golden backing it and former Rep. Bruce Poliquin opposing it alongside House Republican leaders. Golden is insulated from fallout by the gun-rights Sportsman's Alliance of Maine and Sen. Susan Collins, R-Maine, also backing the bill. But if the Texas polling is an indicator, the political consequences are minor so far.

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What we're reading

— Mills issued an order on Tuesday blocking Maine from aiding conservative states in criminal prosecutions of abortion. She also plans to block extradition attempts from other states for charges related to abortion, putting the state in line to join other Democratic-led ones to institute further protections.

— High gas prices stunted Maine tourism on a July 4 weekend marked by near-perfect weather. Travel was only slightly up from a rainy 2021. Gains were concentrated along the New Hampshire border but did not hold up the coast.

— But Maine airports dodged the worst of summer travel nightmares. The Portland International Jetport saw just over 3 percent of flights canceled over the long weekend, nearly in line with its normal figure.

— Fatal drug overdoses in Portland this year have already surpassed the 2021 figure, in line with a statewide increase underscoring the effects of fentanyl.

— Regulators approved an upgrade to the Central Maine Power Co. system serving the Brunswick area that will save ratepayers $8.5 million over 40 years by using battery storage and efficiency measures, Maine Public reported.

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Photo of the day

Hannah Marsh of Old Town and Jordin Williams of Brewer practice at Penobscot Ice Arena in Brewer on Thursday. They are members of the Penobscot Pioneers, a co-op girls varsity ice hockey team that will be the first ever in the Bangor region. (BDN photo by Linda Coan O'Kresik)

📷 Lead photo: Former Gov. Paul LePage talks to reporters during a stop at the Holden Police Department on Friday. (BDN photo by Linda Coan O'Kresik)

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