January 2, 2013

Maine senators, representatives vote in support

The legislation and the process are imperfect, they say, but the measure safeguards the economy.

By Kevin Miller kmiller@pressherald.com
Staff Writer

WASHINGTON -- Maine Reps. Mike Michaud and Chellie Pingree voted in support of a fiscal cliff bill late Tuesday that avoids income tax hikes for the middle class and prevents a sharp increase in milk prices but sets the stage for difficult congressional battles over spending.

click image to enlarge

In this Oct. 22, 2009, file photo, Maine's Republican senators, Olympia Snowe, left, and Susan Collins, are seen on Capitol Hill in Washington.

2009 file photo/The Associated Press

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Here are some of the ways the fiscal cliff compromise will affect Maine:

Income taxes: Income tax rates will remain the same for everyone except individuals earning $400,000 or more and couples earning in excess of $450,000. Exact figures for maine were not available on tuesday. However, it appears several thousand of maine's 500,000-plus taxpaying "households" -- meaning individuals or families -- will see an income tax increase. A maine revenue services official estimated that less than 10,000 individuals or families in maine earned either $200,000 or $250,000, respectively, so the number affected under the current bill will be even smaller.

Unemployment: The bill will allow those who have been unemployed for six months or longer to continue to qualify for unemployment benefits next year. Between 6,400 and 7,100 Mainers would have lost access to unemployment benefits without an extension.

Payroll taxes: The bill allows a temporary "payroll tax holiday" to expire, meaning that the vast majority of workers nationwide will see their paychecks shrink by 2 percent. Congress reduced the payroll tax -- which is used to help pay for social security -- two years ago due to the recession. Maine revenue services estimated that 2 percent increase translates into $355.1 million in Maine.

Wind power: Wind energy companies received a one-year extension on a 2.2 cent tax credit for every kilowatt hour generated from wind power facilities. Maine has more than a half-dozen commercial wind energy facilities operating in the state with numerous more under development.

Spending cuts: The compromise simply delays roughly $110 billion in across-the-board spending cuts for two months. There is concern about how the cuts will affect programs across Maine, from the low-income home energy assistance program to defense contractors such as the Bath Iron Works shipyard.

Pingree and Michaud -- both Democrats -- voted for the bill roughly 21 hours after Maine's two Republican senators, Olympia Snowe and Susan Collins, joined the overwhelming majority of their Senate colleagues in backing the legislation.

The numerous compromises in the bill caused angst on both sides of the aisle.

"I felt like that, for a lot of us, it was certainly not a perfect bill and not a perfect negotiation but it would have been much worse to let this drag on and to go over the cliff," Pingree said moments after the roughly 11 p.m. vote.

Michaud said the bill provides tax predictability to Maine families while extending important tax credits for families and businesses. Michaud also noted that the bill prevents a 27 percent cut in Medicare reimbursement rates for doctors, which many feared could cause some physicians to turn away patients or close their offices. 

"I'm disappointed that House leadership and the White House waited until the last minute and could not accomplish a larger deal to address the debt, debt ceiling, as well as taxes," Michaud said in a statement. "But I look forward to working with my colleagues on both sides of the aisle to tackle those issues in the coming weeks." 

Pingree said that, in addition to the tax provisions, she was pleased that the bill extends unemployment benefits for those struggling to find work and prevents a law change that would have nearly doubled the price of milk.

"This is about making sure the country doesn't go backward in this economic recovery," said Pingree, who is married to S. Donald Sussman, majority share owner of MaineToday Media, publisher of the Portland Press Herald.

The bill now headed to President Obama's desk maintains current income tax rates for most families. Individuals earning $400,000 or more and households earning in excess of $450,000 will see their income tax rates rise from 35 percent to 39.6 percent.

The bill also shields nearly 30 million middle-income families from the alternative minimum tax, or AMT; extends tax credits for families with children; continues unemployment benefits for more than 6,000 Mainers and 2 million nationwide who have been jobless for six months or longer; and renews for one more year tax credits on wind energy companies.

Most workers will still see their paychecks shrink, however, because Congress opted not to extend a temporary 2 percent payroll tax cut that helps fund Social Security. And Congress will have to deal with how to administer across-the-board spending cuts that have been suspended for two months.

The Senate had passed the bill by a vote of 89-8 at 2 am. Tuesday, following last-minute negotiations between Republicans and Vice President Joe Biden.

"It's not the bill that I would have written but, on balance, I think that it will help protect our middle-income families and our small businesses, in many cases, and prevent us from inflicting a severe shock on our economy," Collins said while leaving the Capitol complex early Tuesday morning.

Collins said she was disappointed that the compromise delayed decisions on the spending cuts -- also known as sequestration -- that have created uncertainty in Maine businesses, particularly those in the defense industry.

But Collins said she believed it was important to prevent an average tax increase of more than $2,000 on Maine families and was pleased with language in the bill to avoid a spike in milk prices.

(Continued on page 2)

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