An Act To Provide Tax Relief
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 5 MRSA §1507, next to last ¶, as amended by PL 2005, c. 519, Pt. VV, §1, is repealed.
Sec. 2. 5 MRSA §1511, as amended by PL 2005, c. 519, Pt. VV, §2, is repealed.
Sec. 3. 5 MRSA §1522 is enacted to read:
1. Establishment. The Maine Budget Stabilization Fund, referred to in this section as "the fund," is established and must be administered for the purposes identified in this section.
2. Transfers to fund; limits. The fund may receive transfers by the State Controller of unappropriated surplus at the close of a fiscal year as provided in section 2045 and any other funds identified by law. Amounts in the fund may not exceed 12% of the total General Fund revenues received in the immediately preceding fiscal year and may not lapse, but remain in a continuing carrying account to carry out the purposes of this section. The limit at the close of a fiscal year is based on the total General Fund revenues received in the fiscal year being closed.
3. Use of fund. The Legislature may authorize transfers, appropriations and allocations from the fund only to fund the costs of State Government up to the expenditure limit calculated under section 2044 in years when state revenues are less than the amount necessary to finance the level of expenditures permitted under section 2044.
4. Investment of funds; proceeds. The money in the fund may be invested as provided by law, with the earnings credited to the fund. At the close of every month during which the fund is at the 12% limitation described in subsection 2, the State Controller shall transfer the excess to the Tax Relief Reserve Fund established under section 2045.
Sec. 4. 5 MRSA §1523 is enacted to read:
1. Establishment. The Maine Highway Budget Stabilization Fund, referred to in this section as "the fund," is established and must be administered for the purposes identified in this section.
2. Transfers to fund; limits. The fund may receive transfers by the State Controller of unallocated Highway Fund surplus at the close of a fiscal year as provided in section 2046 and any other funds identified by law. Amounts in the fund may not exceed 12% of the total Highway Fund revenues received in the immediately preceding fiscal year and may not lapse, but remain in a continuing carrying account to carry out the purposes of this section. The limit at the close of a fiscal year is based on the total Highway Fund revenues received in the fiscal year being closed.
3. Use of fund. The Legislature may authorize transfers, appropriations and allocations from the fund only to fund the costs of the Highway Fund budget up to the expenditure limit calculated under section 2044 in years when Highway Fund revenues are less than the amount necessary to finance the level of expenditures permitted under section 2044.
4. Investment of funds; proceeds. The money in the fund may be invested as provided by law with the earnings credited to the fund. At the close of every month during which the fund is at the 12% limitation described in subsection 2, the State Controller shall transfer the excess to the Highway Fund Reserve Fund established under section 2046.
Sec. 5. 5 MRSA c. 142, as amended, is repealed.
Sec. 6. 5 MRSA §1665, sub-§1, as amended by PL 2005, c. 601, §2, is further amended to read:
1. Expenditure and appropriation requirements. On or before September 1st of the even-numbered years, all departments and other agencies of the State Government and corporations and associations receiving or desiring to receive state funds under the provisions of law shall prepare, in the manner prescribed by the State Budget Officer, and submit to the officer estimates of their expenditure and appropriation requirements for each fiscal year of the ensuing biennium. The expenditure estimates must be classified to set forth the data by funds, organization units, character and objects of expenditure. The organization units may be subclassified by functions and activities, or in any other manner, at the discretion of the State Budget Officer. All departments and other agencies receiving or desiring to receive state funds from the Highway Fund shall submit to the officer estimates of their expenditure and appropriation requirements for each fiscal year of the ensuing biennium that do not exceed the Highway Fund appropriation of the previous fiscal year multiplied by one plus the average real personal income growth rate or 2.75%, whichever is less. The Highway Fund highway and bridge improvement accounts are exempt from this spending limitation.
Sec. 7. 5 MRSA §1710-F, sub-§4, as enacted by PL 2005, c. 2, Pt. A, §8 and affected by §14, is repealed.
Sec. 8. 5 MRSA c. 167 is enacted to read:
CHAPTER 167
STATE TAX AND SPENDING LIMITATION
The following provisions of this section apply, notwithstanding any other provision of law.
1. Expenditure limitations. Annual authorized state appropriations and allocations may not exceed the limits provided in this chapter unless authorized by the procedures specified in this chapter.
2. Revenue increases. An increase in revenue may be adopted only as provided in section 2043.
3. Construction. It is the intent of the Legislature that this chapter be interpreted liberally to restrain excess growth of state and local government.
As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.
1. Emergency. "Emergency" means extraordinary circumstances outside the control of the Legislature, including: A. Catastrophic events such as natural disaster, terrorism, fire, war and riot;
B. Citizens' initiatives or other referenda; and
C. Court orders or decrees.
2. Increase in revenue. "Increase in revenue" means any legislation or tax levy that is estimated to result in a net gain in revenue of at least 0.01% of General Fund revenue in at least one fiscal year and: A. Enacts a new tax;
B. Increases the rate or expands the base of an existing tax;
C. Repeals or reduces any tax exemption, credit or refund; or
D. Extends an expiring tax increase.
3. Inflation adjustment factor. "Inflation adjustment factor" means the increase in the Consumer Price Index for the most recently available calendar year as calculated by the United States Department of Labor, Bureau of Labor Statistics. The inflation adjustment factor may not be less than zero.
4. Population adjustment factor. "Population adjustment factor" means the average annual percentage increase in population for the 3 most recent years for which data is available as determined annually by the Executive Department, State Planning Office statewide based on federal census estimates. The population adjustment factor may not be less than zero.
5. Revenue. "Revenue" means taxes collected by the State.
6. State spending. "State spending" means any authorized state appropriations and allocations.
7. Tax. "Tax" means any amount raised for the general support of government functions. It does not include charges to cover the cost of specific goods or services provided or fees or other charges that are assessed for the purposes of covering the cost of administration of a government activity related to the purposes for which the fee is charged.
1. Approval of increases. To adopt an increase in revenue: A. The measure must be approved by a majority vote of all the members of each House of the Legislature; and
B. Except as provided in subsection 2, the measure must be approved by a majority of the voters as described in subsection 3.
2. Exceptions. Voter approval under subsection 1, paragraph B is not required if: A. Annual revenue is less than annual payments on general obligation bonds, required payments related to pensions and final court judgments; or
B. The measure is an emergency tax and the provisions of section 2048 are followed.
3. Approval by voters; emergency approval. The question of whether to adopt legislation to impose an increase in revenue must be submitted to the voters for approval at the next general election as defined in Title 21-A, section 1. If the Legislature determines by a majority vote that legislation to increase taxes should take effect sooner than the next general election, the Legislature may provide for submission of the question to the voters at any regular or special election as defined in Title 21-A, section 1.
4. Revenue estimates. A measure submitted to the voters under subsection 3 must include an estimate of the amount to be raised by the measure for the first 4 fiscal years of its implementation if the measure is submitted to the voters in the first year of a biennial budget and the first 3 fiscal years if submitted in the 2nd year of a biennial budget.
5. Notice. At least 30 days before an election required under subsection 3, the Secretary of State shall mail at the least cost a titled notice or set of notices addressed to "All Registered Voters" at each address of every active registered voter. Notices must include the following information and may not include any additional information: A. The election date, hours, ballot title and text and local election office address and telephone number;
B. For each proposed increase in revenue, the estimated or actual total of state spending for the current fiscal year and each of the past 4 years and the overall percentage and dollar change; and
C. For the first full fiscal year of each proposed increase in revenue, estimates of the maximum dollar amount of each increase and of the first year's state spending without the increase.
Except by later voter approval, if an increase in revenue exceeds any estimate prepared under paragraph C for the same fiscal year, the tax increase is thereafter reduced in proportion to the amount of the excess, and the excess revenue that was collected must be transferred to the Tax Relief Reserve Fund under section 2045 in the next fiscal year. Ballot questions for increases in revenue must begin: "Do you favor (description of the tax increase) to increase state revenues by (amount of first or, if phased in, full fiscal year dollar increase) annually for the purpose of...?" The ballot question must also contain the information required by paragraphs B and C.
6. Costs. The State shall reimburse municipalities for the costs of a special election, as defined in Title 21-A, section 1, called under this section.
1. State expenditure limitation. Beginning with the first fiscal year that begins after this section takes effect, the maximum annual percentage change in state spending in the categories specified in this subsection equals the inflation adjustment factor plus the population adjustment factor and any increases attributable to measures approved under section 2043. This limitation must be calculated separately for the following categories: A. General Fund;
B. Highway Fund; and
C. Other Special Revenue Funds, for which separate individual limitations must be applied by program, including internal service accounts but not bond fund accounts.
2. Exceptions. The following may not be counted in calculating expenditure limitations under subsection 1: A. Amounts returned to taxpayers as refunds of amounts exceeding the expenditure limitation in a prior year;
B. Amounts received from the Federal Government;
C. Amounts collected on behalf of another level of government;
D. Pension contributions by employees and pension fund earnings;
E. Pension and disability payments made to former government employees;
F. Amounts received as grants, gifts or donations that must be spent for purposes specified by the donor;
G. Amounts paid pursuant to a court award; or
H. Reserve transfers.
3. Approval of increases. To adopt an increase in state spending beyond the expenditure limitations under subsection 1: A. The measure must be approved by a majority vote of all the members of each House of the Legislature; and
B. Except as provided in subsection 4, the measure must be approved by a majority of the voters as described in subsection 5.
4. Exceptions. Voter approval under subsection 3, paragraph B is not required if the state spending is a result of an increase in revenue approved under section 2043.
5. Approval by voters; emergency approval. The question of whether to adopt legislation to impose an increase in state spending beyond the expenditure limitation under subsection 1 must be submitted to the voters for approval at the next general election as defined in Title 21-A, section 1. If the Legislature determines by a majority vote that legislation to increase state spending beyond the limitation should take effect sooner than the next general election, the Legislature may provide for submission of the question to the voters at any regular or special election as defined in Title 21-A, section 1.
6. Spending estimates. A measure submitted to the voters under subsection 3 must include an estimate of the state spending increase by the measure for the first 4 fiscal years of its implementation if the measure is submitted to the voters in the first year of a biennial budget and the first 3 fiscal years if submitted in the 2nd year of a biennial budget.
7. Notice. At least 30 days before an election required under subsection 5, the Secretary of State shall mail at the least cost a titled notice or set of notices addressed to "All Registered Voters" at each address of every active registered voter. Notices must include the following information and may not include any additional information: A. The election date, hours, ballot title and text and local election office address and telephone number;
B. For each proposed state spending increase, the estimated or actual total of spending for the current fiscal year and each of the past 4 years and the overall percentage and dollar change; and
C. For the first full fiscal year of each proposed state spending increase, estimates of the maximum dollar amount of each increase and of fiscal year spending without the increase.
Except by later voter approval, if a state spending increase exceeds any estimate prepared under paragraph C for the same fiscal year, the state spending increase is thereafter reduced in proportion to the amount of the excess. Ballot questions for state spending increases must begin: "Do you favor increasing state spending by (amount of first or, if phased in, full fiscal year dollar increase) annually for the purpose of...?" The ballot question must also contain the information required by paragraphs B and C.
8. Costs. The State shall reimburse municipalities for the costs of a special election, as defined in Title 21-A, section 1, called under this section.
1. Fund created. The Tax Relief Reserve Fund, referred to in this section as "the fund," is created for the purposes set forth in this chapter. Amounts in the fund may not lapse, but remain in a continuing carrying account to carry out the purposes of this section.
2. Transfer. At the close of each fiscal year, the State Controller shall identify the amount of General Fund unappropriated surplus and make the following transfers: A. Eighty percent of the unappropriated surplus must be transferred to the fund; and
B. Twenty percent of the unappropriated surplus must be transferred to the Maine Budget Stabilization Fund established in section 1522.
3. Notification. By September 1st annually, the State Controller shall notify the Legislature and the State Tax Assessor of the amount in the fund as a result of the transfer required by subsection 2.
4. Refund. If the amount in the fund exceeds 1% of General Fund expenditures, the Legislature shall, by September 15th, enact legislation to provide for the refund to taxpayers of amounts in the fund. Refunds may take the form only of temporary or permanent broad-based tax rate reductions.
5. Refund in case of legislative inaction. If the Legislature does not enact legislation by September 15th to provide refunds pursuant to subsection 4, then the State Controller shall, by September 30th, notify the State Tax Assessor of the amount in the fund. The State Tax Assessor shall calculate a one-time bonus personal exemption refund. The amount of the personal exemption refund must be calculated by dividing the amount in the fund identified by the State Controller under subsection 3 by the number of personal exemptions claimed on income tax returns filed for tax years beginning in the previous calendar year and rounded down to the nearest $5 increment. The State Tax Assessor shall issue a refund by October 15th to a taxpayer who filed an income tax return by April 15th of the same calendar year based on the number of personal exemptions claimed on the taxpayer's return without regard to the taxpayer's tax liability for the year.
1. Fund created. The Highway Fund Reserve Fund, referred to in this section as "the fund," is created for the purposes set forth in this chapter.
2. Transfer. At the close of each fiscal year, the State Controller shall identify the amount of Highway Fund unallocated surplus and make the following transfers: A. Eighty percent of the unallocated surplus must be transferred to the fund; and
B. Twenty percent of the unallocated surplus must be transferred to the Maine Highway Budget Stabilization Fund established in section 1523.
3. Notification. By September 1st annually, the State Controller shall notify the Legislature of the amount in the fund as a result of the transfer required by subsection 2.
4. Refund. If the amount in the fund exceeds 1% of Highway Fund expenditures for the previous fiscal year, the State Tax Assessor shall calculate, based on the amount in the fund, a proportional reduction in the taxes on motor fuels under Title 36, Part 5 to become effective the following January 1st and remain in effect for one calendar year.
By September 1st annually, each state agency that manages an Other Special Revenue Funds account shall submit an annual report to the Legislature identifying revenues received in the preceding fiscal year that exceed the expenditure limitation established in section 2044 and any other uncommitted revenues received during the previous fiscal year and proposing a plan for refunding the amount identified that exceeds 10% of the previous fiscal year's expenditure.
1. Emergency taxes permitted; conditions. The State may impose emergency taxes only in accordance with this section: A. The tax must be approved for a specified time period by a majority of the members of each House of the Legislature;
B. Emergency tax revenue may be spent only after other available reserves are depleted and must be refunded 180 days after the emergency ends if not spent on the emergency; and
C. The tax must be submitted for approval by the voters at the next regular election, as defined in Title 21-A, section 1.
2. Absence of approval. If not approved by the voters as provided in this section, an emergency tax expires 30 days following the election.
Sec. 9. 5 MRSA §13063-C, sub-§4, ¶B, as amended by PL 2005, c. 2, Pt. A, §9 and affected by §14, is further amended to read:
B. Notwithstanding section 1585, any balance remaining in the program after July 31, 2007 must be transferred to the Maine Budget Stabilization Fund as established in section 1532 1522.
Sec. 10. 5 MRSA §17253, sub-§3, as amended by PL 2005, c. 2, Pt. A, §10 and affected by §14, is further amended to read:
3. Components of unfunded liability contribution. The annual valuation report prepared by the actuary in accordance with section 17107 must include identification of the impact on the employer contribution rate of any excess General Fund revenues transferred to the Retirement Allowance Fund pursuant to section 1532.
Sec. 11. 25 MRSA §1612, sub-§7, as amended by PL 2005, c. 2, Pt. A, §12 and affected by §14, is repealed.
Sec. 12. 30-A MRSA §706-A, sub-§3, ¶C is enacted to read:
C. The growth limitation factor may not exceed average real personal income growth plus forecasted inflation.
Sec. 13. 30-A MRSA §706-A, sub-§7, as affected by PL 2005, c. 2, Pt. B, §4 and amended by c. 12, Pt. WW, §10 and affected by §§13 and 14, is further amended to read:
7. Process for exceeding county assessment limit. A county may exceed or increase the county assessment limit only if approved by a vote of a majority of all the members of both the county budget committee or county budget advisory committee and the county commissioners and if approved by the voters at a referendum held at a regular or special election, as defined in Title 21-A, section 1. Unless a county charter otherwise provides or prohibits a petition and referendum process, if a written petition, signed by at least 10% of the number of voters voting in the last gubernatorial election in the county, requesting a vote on the question of exceeding the county assessment limit is submitted to the county commissioners within 30 days of the commissioners' vote pursuant to this subsection, the article voted on by the commissioners must be submitted to the legal voters in the next regular election or a special election called for that purpose. The election must be held within 45 days of the submission of the petition. The election must be called, advertised and conducted according to the law relating to municipal elections, except that the registrar of voters is not required to prepare or the clerk to post a new list of voters, the filing requirement contained in section 2528 does not apply and absentee ballots must be prepared and made available at least 14 days prior to the date of the referendum. For the purpose of registration of voters, the registrar of voters must be in session the secular day preceding the election. The voters shall indicate by a cross or check mark placed against the word "Yes" or "No" their opinion on the article. The results must be declared by the county commissioners and entered upon the county records.
Sec. 14. 30-A MRSA §706-B is enacted to read:
Each municipality shall use the cost center budget summary format developed by the Department of Audit under Resolve 2005, chapter 136 in adopting budgets beginning with the first fiscal year that begins after 6 months from the effective date of this section.
Sec. 15. 30-A MRSA §5721-A, sub-§3, ¶C is enacted to read:
C. The growth limitation factor may not exceed average real personal income growth plus forecasted inflation.
Sec. 16. 30-A MRSA §5721-A, sub-§7, as affected by PL 2005, c. 2, Pt. C, §5 and amended by c. 12, Pt. WW, §12 and affected by §§15 and 16, is further amended to read:
7. Process for exceeding property tax levy limit. A municipality may exceed or increase the property tax levy limit only by the following means.A. If the municipal budget is adopted by town meeting or by referendum, the property tax levy limit may be exceeded by the same process that applies to adoption of the municipal budget except that the vote must be by written ballot on a separate article that specifically identifies the intent to exceed the property tax levy limit and the action must be approved by the voters at a referendum held at a regular or special election, as defined in Title 21-A, section 1.
B. If the municipal budget is adopted by a town council or city council, the property tax levy limit may be exceeded only if approved by a majority vote of all the elected members of the town council or city council on a separate article that specifically identifies the intent to exceed the property tax levy limit and approved by the voters at a referendum held at a regular or special election, as defined in Title 21-A, section 1. Unless a municipal charter otherwise provides or prohibits a petition and referendum process, if a written petition, signed by at least 10% of the number of voters voting in the last gubernatorial election in the municipality, requesting a vote on the question of exceeding the property tax levy limit is submitted to the municipal officers within 30 days of the council's vote pursuant to this paragraph, the article voted on by the council must be submitted to the legal voters in the next regular election or a special election called for that purpose. The election must be held within 45 days of the submission of the petition. The election must be called, advertised and conducted according to the law relating to municipal elections, except that the registrar of voters is not required to prepare or the clerk to post a new list of voters and absentee ballots must be prepared and made available at least 14 days prior to the date of the referendum. For the purpose of registration of voters, the registrar of voters must be in session the secular day preceding the election. The voters shall indicate by a cross or check mark placed against the word "Yes" or "No" their opinion on the article. The results must be declared by the municipal officers and entered upon the municipal records.
Sec. 17. 30-A MRSA §5721-B is enacted to read:
Each municipality shall use the cost center budget summary format developed by the Department of Audit under Resolve 2005, chapter 136 in adopting budgets beginning with the first fiscal year that begins after 6 months from the effective date of this section.
Sec. 18. 36 MRSA §3321, as amended by PL 2007, c. 306, §9, is further amended to read:
1. Generally. Beginning in 2003, and each calendar year thereafter, the excise tax imposed upon internal combustion engine fuel pursuant to section 2903, subsection 1 and the excise tax imposed upon distillates pursuant to section 3203, subsection 1 are subject to an annual rate of adjustment pursuant to this section. On or about February September 15th of each year, the State Tax Assessor shall calculate the adjusted rates by multiplying the rates in effect on the calculation date by an inflation index as computed in subsection 2. The adjusted rates must then be rounded to the nearest 1/10 of a cent and become effective on the first day of July immediately following the calculation if approved by the voters pursuant to subsection 5. The assessor shall publish the annually adjusted fuel tax rates and shall provide all necessary forms and reports to suppliers, distributors and retail dealers.
2. Method of calculation; inflation index defined. The inflation index for 2003 is 1.118, representing annual inflation adjustments for the years 1999 to 2002, inclusive. Starting in 2004 and every year thereafter, the inflation index is the Consumer Price Index as defined in section 5402, subsection 1 for the calendar year ending on the December 31st immediately preceding the calculation date, divided by the Consumer Price Index for the prior calendar year.
3. Exclusion. This section does not apply to internal combustion engine fuel purchased or used for the purpose of propelling jet or turbojet engine aircraft.
4. Legislative review. Starting in 2008 and each even-numbered year thereafter, the Department of Transportation shall submit an emergency bill by the cloture date established for departments and agencies for the first regular session of the Legislature that suspends the adjustment in fuel tax rates in the upcoming biennium resulting from the operation of this section.
5. Voter approval. Beginning with adjustments calculated following the effective date of this subsection, a change in the rate of excise tax resulting from the adjustment required in subsection 1 may take effect only if approved by a majority of the voters at a regular or special election as defined in Title 21-A, section 1. The question on the ballot must read:
"Do you favor increasing the rate of motor fuel taxes to account for inflation? If this question is approved the rate of tax on gasoline will increase from ____¢ per gallon to ____¢ per gallon and the rate of tax on diesel fuel will increase from ____¢ per gallon to ____¢ per gallon beginning next July 1st."
Sec. 19. 36 MRSA §7303 is enacted to read:
1. Annual report. Each county and municipality shall submit a copy of its cost center budget summary adopted pursuant to Title 30-A, sections 706-B and 5721-B, respectively, to the bureau within 30 days after final approval of the county or municipal budget.
2. Public access. Each county and municipality shall make copies of the cost center budget summary submitted pursuant to subsection 1 available to the public at least 2 weeks before any action is taken to adopt the budget. If the county or municipality has a publicly accessible website, the county or municipality shall include a copy of the cost center budget summary as proposed and as finally adopted on that website. The bureau shall include all adopted county and municipal budgets in the cost center budget summary format on its publicly accessible website.
Sec. 20. Maine Budget Stabilization Fund. The Maine Budget Stabilization Fund established in the Maine Revised Statutes, Title 5, section 1522 is the successor in every way to the Maine Budget Stabilization Fund established under former Title 5, section 1532. All funds in the Maine Budget Stabilization Fund established under former Title 5, section 1532 are transferred to the Maine Budget Stabilization Fund established in Title 5, section 1522 on the effective date of this Act.
Sec. 21. Legislative intent; relationship to private and special law. It is the intent of the Legislature that the provisions of this Act supersede any conflicting provisions of private and special law relating to the determination of revenue, fees and expenditures.
Sec. 22. Application. This Act applies to fiscal years beginning on or after the date 4 months after the effective date of this Act.
summary
This initiated bill imposes expenditure limitations on state and local government and requires voter approval of certain state tax increases.
Under this bill, growth in annual expenditures of the General Fund, the Highway Fund and Other Special Revenue Funds are limited according to increases in population and inflation. For the General Fund and Highway Fund budgets, revenues exceeding the expenditure limitation must be distributed by directing 20% of that excess to a budget stabilization fund and 80% of that excess to a tax relief fund. The budget stabilization funds may be used only in years when revenues are not sufficient to fund the level of expenditure permitted by the growth limits. The Tax Relief Reserve Fund must be used to provide tax relief through broad-based tax rate reductions or refunds proportional to individual income tax personal exemptions claimed in the previous tax year. The Highway Fund Reserve Fund must be used to provide a decrease in motor fuel taxes. For state agencies that manage Other Special Revenue Funds, the managers of those funds must report excess surpluses to the Legislature with a plan for refund of those revenues.
Under this bill, a state tax increase would require a majority vote of each House of the Legislature and majority approval of the voters.
This bill provides that state expenditure limits contained in the bill may be exceeded by a majority vote of each House of the Legislature and majority approval by the voters.
The bill adds the requirement of majority approval by the voters before municipal and county expenditure limits may be exceeded.
The bill requires majority approval by the voters for the annual indexing for inflation of motor fuel taxes.
The bill requires counties and municipalities to use a cost center budget summary format developed by the Department of Audit and requires information in that format to be made available to local voters, filed annually with Maine Revenue Services and posted on any publicly accessible website maintained by the county or municipality as well as on the Maine Revenue Services website.