This time, she’s only going to tax some of the businesses, and she’ll take $61 million she initially intended for the rainy day fund to cover her spending increase in the current budget cycle.

Governor Mills increased state spending by $800 million in her first two year budget. The state is entering the last few months of that budget, which ends on June 30. If Governor Mills matches federal tax law, including the provisions to not tax PPP loans and allow the deductions as Congress intended, she will be $126 million short on June 30, with $100 million of that shortfall tied to the federal PPP changes.

The Taxation Committee in the Legislature met yesterday, and Mills Administration officials presented the new plan, which will only result in an $82 million dollar shortfall.

Because Maine’s constitution requires the budget be balanced, the Mills Administration and the Legislature must fill that gap. The Mills Administration recommends using about $20 million generated by extra federal Medicaid reimbursements, as wells as the $61 million Governor Mills initially proposed putting in the rainy day fund.

No spending cuts are proposed, only spending the cash on hand. Governor Mills refuses to admit that her spending proposals might have been, and continue to be, more than Maine can afford.

Meanwhile, the Tax Committee has tried a number of ways to ensure that the majority members on the committee, all Democrats, don’t have to go on record voting against fully matching the federal tax laws related to the PPP.

Last week, the Committee Chair, Senator Ben Chipman of Portland, blamed the snow day—even though they were already meeting remotely because of the pandemic—for not being able to send a recommendation to the Appropriations Committee. Another member complained it was hard to read the material while in a Zoom meeting. They needed more time before they could vote on whether to match the federal PPP tax law.

Yesterday, when the Tax Committee members met again, the majority spent more than two hours of their meeting using procedural issues and other maneuvers to avoid voting against fully matching federal tax law.

In the end the majority members of the Tax Committee didn’t vote for fully matching federal law, but they didn’t have to vote against it, either.

Maine voters and taxpayers should expect that our legislators go on record whatever their position.

From the Mills Administration’s initial proposal two weeks ago, to the vote taken yesterday, the issue of taxing PPP loans has been managed to protect the interests of Augusta, not the businesses trying to recover from the pandemic.