State Budget Down to the Wire

At publication time on this last day of June 2017, the Maine Legislature had yet to enact a budget for the biennium that starts at midnight tonight. Today, the Legislature was presented a budget proposal issued last evening by Senate President Mike Thibodeau and Speaker of the House Sara Gideon. With respect to the largest challenges in the budget, this proposal provides $162 million in additional funding for education, eliminates the 3% high-income earner surcharge and institutes a 10.5% lodging tax, up from the current 9% rate. This afternoon, Governor LePage stated in a recorded press conference that he will not sign any bill that increases taxes, and that if an enacted budget that increases any taxes is delivered to him tonight, state government will shut down and, he continued to say “we’ll see them in ten days.” Later in his remarks, he encouraged all four members of Legislative Leadership to sit with him to hammer out a budget that doesn’t increase taxes. The Governor has ten days, not including Sundays, to return a bill with his signature or veto. At 4:00 pm on this last day of June, the House opened this budget for a vote, and engrossed the bill with an 87 in favor and 60 opposed. This is 14 votes shy of the two-thirds vote needed on enactment and to override a gubernatorial veto. Obviously this is a very fluid situation and the outcome is not yet clear.

Legislature has Voted to Extend Session by Five Legislative Days

The House and Senate have once again voted to approve an extension of this legislative session by five legislative days. This is the second and final time that the Legislature is allowed to extend its session. Legislative days are only those days in which the Legislature meets, but legislative leaders have said that if there is no budget, they will continue to hold session on consecutive days until a budget agreement is reached. If the Legislature meets on consecutive days starting tomorrow, their allowed number of legislative days will expire on July 4. Should they consume all five days, they would have to call themselves into a Special Session to reconvene. The Governor also could convene a Special Session. Legislators will not receive a legislative paycheck for any days spent in these extensions. However, if they go into Special Session, they will go back on the payroll.

Bills on the Special Appropriations Table and Bond Bills to be Finalized

At the time of publication, 132 bills have been enacted in the House and are now pending on the Special Appropriations Table before being considered for enactment by the Senate. The appropriations requests for these bills total approximately $1.2 billion, and funding any of those bills that impact the biennial budget under current consideration will be a challenge. Typically, the Legislature enacts a budget and then “runs the Appropriations Table.” With the budget running up against the clock, it is possible that many of these bills could be carried over to the next legislative session, possibly commencing in January 2018. Also pending in the Appropriations and Financial Affairs Committee are 36 bills that would seek state bonding. The total bond requests represented in these bills is $1.3 billion. In other words, the Appropriations and Financial Affairs Committee will require some time to sift through the various proposals that are still within their jurisdiction.

Tip Credit Restored

This week, Governor LePage signed into law the restoration of the so-called "tip credit," which will reinstate the former law with respect to servers. The tip credit law allows an employer to credit not more than 50% of a server's earned tips toward the statutory minimum hourly wage. The Governor's signature largely puts to rest the highly contentious tip credit issue, which drew thousands of Maine servers from both sides of the issue to public hearings in Augusta. The increase in the overall minimum wage, which will be raised incrementally to $12 by 2020, will remain in place. The reinstated tip credit law will take effect 90 days after adjournment.

Ranked-Choice Voting Law Remains on the Books Despite Unconstitutionality

For now, the voter-approved ranked-choice voting law will remain as enacted by Maine voters at the ballot box last fall. This spring, the Maine Supreme Judicial Court issued an Advisory Opinion stating that the law would be found unconstitutional with respect to the elections of some of the political offices under a ranked-choice voting process. Following the Court’s Advisory Opinion, the Legislature began work to try to clarify Maine's electoral process. Two competing efforts to do so have failed, however, leaving the future of the law uncertain. One bill, which would have started the process of amending the Constitution of Maine to allow for the ranked choice process for all political offices, failed to garner the necessary two-thirds support in the House and Senate. Another bill, which would have repealed the law, died in non-concurrence this week, with the House insisting on a partial repeal and the Senate insisting on a full repeal. Given the uncertainty surrounding the law, this issue is likely to be revisited at the next opportunity.