Mills signs supplemental budget with tax relief

(The Center Square) – Maine Gov. Janet Mills has signed a supplemental budget that includes tens of millions of dollars in spending to provide tax relief for workers and employers affected by the pandemic.

The spending package, intended to keep the state running until July, includes provisions to eliminate state taxes on the federal Paycheck Protection Program for more than 28,000 small businesses that received the disaster loans, and exempt the first $10,200 of federal unemployment benefits received last year by jobless workers from state income taxes.

Mills praised the bill’s passage as an example of bipartisan cooperation, with Democratic and Republican legislative leaders coming together to help struggling workers and businesses.

“Because of that, approximately 160,000 Maine people who received unemployment benefits and the 28,000 Maine businesses that received PPP funds will receive tax relief – important progress as we continue to fight the pandemic, keep Maine people healthy and vaccinate them as quickly as possible, and accelerate our economic recovery,” she said.

The supplemental budget includes $100 million to exempt Maine businesses from paying state income taxes on PPP loans and $47 million to exempt the first $10,200 of unemployment benefits from state income taxes.

It also includes $30 million for nonprofits who serve Maine’s elderly and disasbled populations. The money is meant for providers that didn’t qualify under federal law to receive PPP funds and other federal and state pandemic relief.

To be sure, wrangling between Democrats and Republicans over tax relief in the bill nearly sank the proposal.

House Republicans initially threatened to vote down the bill because a previous version wouldn’t eliminate state tax obligations for 251 businesses that received more than $1 million in loans through the federal program.

The Democratic-controlled state Senate signed off on the bill on Wednesday. But House Republicans voted down the plan Thursday after they failed to win concessions on other changes to the state tax code to provide more relief. The House vote was 83-63 in favor of the measure, but that was short of the two-thirds majority needed to approve it.

This impasse stretched into a third day, but House and Senate leaders emerged early Friday morning with a compromise deal after Republicans dropped their opposition after Democrats agreed to add another $8 million to the state’s “rainy day” reserve fund.

The Senate approved the bill unanimously; the House approved it 139-1.

Dana Connors, president of the Maine State Chamber of Commerce, issued a statement Thursday praising Mills and lawmakers for “working hard and in a bipartisan manner to solve problems and enact a supplemental budget that will provide critical relief to Maine businesses and unemployed Maine people alike.”

Mills also signed more than two dozen other bills Thursday dealing with a range of issues from juvenile justice to beer and wine sales and the timeframe for processing mail ballots.

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