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February 25, 2014

State of the State
On February 4th, Governor Paul LePage delivered the 2014 State of the State address. As expected, the Governor highlighted his Administrations’ accomplishments. These include: making Maine more competitive; lowering of the unemployment rate in Maine; the creation of more than 13,000 new jobs in the private sector; the elimination of almost $2 billion in pension debt and the payment of the $750 million in debt owed to Maine’s hospitals.

Medicaid Expansion
In addition to the topics of jobs and the economy, another key component of the State of the State address was the issue of Medicaid Expansion. LePage announced a new proposal to address fraud and abuse of the welfare system in Maine. His plan would prohibit TANF monies from being used for alcohol, tobacco, gambling and other adult entertainment. It would also require those able-bodied adults seeking welfare to conduct a job search before applying for benefits.
The speech may be reviewed at: http://www.maine.gov/governor/lepage/news/speeches/index.shtml

Liquor Privatization Contracts Announced
On July 1, 2014, the state will partner with a new firm to administer Maine’s wholesale liquor business. This new deal is part of a plan to overhaul the state’s wholesale liquor operation. The state wants to keep a greater portion of the revenue from liquor sales, while lowering retail prices to become more competitive with New Hampshire’s state-run liquor stores. It also wants to pay higher commissions to agency liquor stores.

The ten year contract was awarded to Pine State Trading Co. The company was one of two that bid for the distribution and warehousing portion of a two-part contract that will take effect July 1. In addition, Pine State was also selected to handle the spirits marketing part of the contract; details are still to be negotiated with the Bureau of Alcoholic Beverages and Lottery Operations, BABLO.

Alcohol Legislation
The Joint Standing Committee on Legal and Veterans Affairs (VLA) has several priority bills addressing alcohol issues. The first is a bill sponsored by Representative Luchini of Ellsworth. LD 1763, An Act To Make Available to the Public Certain Information Concerning the Alcohol Content of Malt Liquor, Wine and Spirits (EMERGENCY).

This bill would prohibit the use of images as well as phrases that may be considered as statements of high alcohol content but permits the advertisement of alcohol content with respect to malt liquor, wine and spirits as long as it is expressed as a percentage of alcohol by volume. The MBWDA believes consumers should have access to information on the beverages they consume. The current restriction in law is antiquated and should be updated to allow disclosure of the ABV – alcohol by volume details.

VLA has set a public hearing for this bill on Wednesday, February 26, 2014 at 1:00 pm.

To listen to the hearing please use this link: http://www.maine.gov/legis/audio/legal_cmte.html

Fiscal Realities
The LePage Administration proposed the elimination of municipal revenue sharing in the 2014-15 biennial budget last year. This proposal was not embraced by the Legislature. However, to pass the budget and avoid a state shutdown, a process was created by which $40 million in tax expenditures were to be identified or municipal revenue sharing was to be reduced by whatever amount was not identified. A special task force met to work on this and the draft report of the group was presented to the Taxation Committee.

This bill did not adopt the recommendations of the task force, as the group did not vote on a final report. The Taxation committee was left with only a set of ideas to consider. The Appropriations Committee took this list of issues and created a draft document to move the budget process forward. Appropriations held a public hearing on LR 2721, An Act Related to the Report of the Tax Expenditure Task Force – this document was never printed as an LD. This LR would have increased taxes in an effort to reinstate the $40 million for municipal revenue sharing.

Included in the list of increased taxes were the following:

  • Limit the Business Equipment Tax Reimbursement (BETR) program to 12 years
  • Elimination of retail from BETR
  • Prohibit companies from using the “Last In First Out,” (LIFO), accounting method to value inventory

LD 1762, An Act Related to the Report of the Tax Expenditure Review Task Force, same title as LR 2721, but different content. This bill would reinstate the $40 million reduction to municipal revenue sharing by transferring monies from the Maine Budget Stabilization Fund and the Tax Relief Fund. The remaining monies would be captured by giving the State Controller the ability to partially offset by a transfer from Maine’s “rainy day” fund.

Governor LePage and Republican’s in the Legislature objected to the use of “rainy day” funds to supplement municipal revenue sharing. In fact, the Governor has indicated that he may not issue voter-authorized bonds if a reduction of the “rainy day” fund affects the State’s credit rating. Over the past two weeks, this bill has proceeded through the legislature and, on February 13th, both the House and Senate enacted LD 1762 and sent the bill to the Governor’s desk. It is unclear if the Governor intends to let this proposal become law or if he will veto this bill.

These are just a few of the industry highlights that are happening at the State Capitol. To follow the public policy debates and the House and Senate discussions, please go the Legislative website for more information: http://www.maine.gov/legis/

$40 million in state aid to towns pass into law
A bill to restore $40 million of state aid to municipalities passed quietly into law at midnight Tuesday, February 25.

The Democrat-led measure was approved earlier this month in the House and Senate. It funds the restoration of state revenue sharing with $21 million from the state’s rainy day fund, $4 million from a fund designed to accumulate budget surplus with the eventual goal of reducing the state income tax and $15 million from new, unappropriated revenue predicted in a December revenue forecast.

Feb. 25 was the governor’s deadline to veto the bill, sign it or let it become law without his signature.

Click here to read the full article from the Bangor Daily News.

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