AUGUSTA — The Legislature is poised to pass a bill that would use future state budget surpluses to lower Maine’s income tax rate. 

The bill, LD 849, has been criticized by Democrats as being the GOP’s end-around to enact a Taxpayer Bill of Rights, mirroring citizen-initiated spending cap proposals that have been rejected three different times by voters. 

The TABOR initiatives sought to put limitations on the ability of the Legislature and municipalities to increase taxes by requiring voter approval.

Proponents of LD 849, sponsored by Sen. Jonathan Courtney, R-Springvale, say the measure is different from TABOR because it focuses only on state surpluses. Courtney says the state should be compelled to gradually lower the income tax rate during times of economic prosperity.

The bill would gradually lower the income tax from 7.95 percent to 4 percent. 

Critics of the bill say it puts state spending decisions on autopilot and could prevent the state from funding 55 percent of education costs, as mandated by law.

Municipal officials also worry it could shift the tax burden to towns, which could be forced to raise property taxes to make up for lost revenue sharing. 

The Maine Municipal Association opposes the bill, noting recently that the proposal directs the Legislature to use general fund surpluses to lower the income tax rate. In the past, lawmakers have redirected $40 million each year of municipal revenue sharing funds to balance the general fund. 

Democrats say the bill will result in cutting the state budget by as much as one-third without saying how it will be paid for. They add that the cuts would benefit mostly wealthy Mainers and provide little relief to average earners. 

The Maine Center for Economic Policy, a progressive advocacy group, says 75 percent of the tax relief would benefit the top 20 percent of Maine earners. 

Courtney says that under the proposal, taxes would only decrease when there are extra revenues in the state budget. He recently said the measure would force the Legislature to pass on tax relief to Mainers when it can afford it, something the state failed to do during the prosperous late 1990s.

The Legislature passed a similar measure in 1995 when Republicans held a majority in the Senate. Democrats repealed the law two years later.

The bill was carried over from last year, however, the current language wasn’t inserted until recently. Similar language was included in Courtney’s LD 9, a proposal unanimously rejected by the Taxation Committee last year. 

The bill has already received support in the Republican controlled Senate. Republicans in House were poised to pass the bill last week, but eventually tabled it when an amended version failed. 

The Senate version mandates surplus revenues first fund the state’s circuit-breaker program before ratcheting down income taxes. 

Democrats have introduced amendments that would prioritize municipal revenue sharing and education funding, but each has failed to gain support from the Republican majority. 

Some have hinted that a peoples veto effort could be used to overturn LD 849 if it’s enacted. 

If that happens Democrats would follow in the footsteps of a successful Republican effort to overturn Democrats’ 2009 tax reform package. That proposal lowered income taxes by increasing fees and taxes on other services. 

Voters overturned the bill in 2010. 

LD 849 is expected to come up in the House this week. 

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