The story behind the tax break fight in Augusta

Things are usually quiet around the State House between Thanksgiving and the New Year. But not this year — because there’s nothing like a potential $40 million hole in the state budget to get a fight started.

The $40 million is the amount of money the legislature promised it would take out of the $1 billion the state spends now on dozens of different tax breaks for businesses and special interests.

State house, photo John Christie

State house, photo John Christie

If they can’t agree on which tax breaks to eliminate or reduce, then $40 million still has to be cut somewhere else in the state budget to keep it balanced.

As the legislature’s “Tax Expenditure Review Task Force”  tries to come up with which tax breaks to put on the chopping block, it’s running into opposition because just about every break in the tax code has a champion.

The Portland Press Herald’s Steve Mistler wrote a fine story this weekend about difficulty the task force is having as it looks for tax breaks to cut.

The Center has been writing about the state’s costly tax breaks since we published our first story in January, 2010, “Well-connected lobbyists won special tax treatment from Gov. Baldacci.”  That story explains the genesis of some of the breaks being considered now for elimination.

We followed that with an in-depth series about the state’s tax breaks for businesses, Risky business tax breaks cost state $100 million per year,”State lacks proof that $46m in Pine Tree Zone tax breaks created jobsandTax break deals studied … and studied, but questions remain unresolved.”

And then we examined the growing bipartisan concern at the State House in “Criticism of tax breaks growing in legislature.”

 The Tax Expenditure Review Task Force holds its final meeting today, at which it will present its final proposal for cutting the $40 million. But that will only be the beginning of the fight, because the proposal then goes on to the legislature and Gov. Paul LePage. As state Sen. Roger Katz, R-Augusta, told the Center in one of our stories on tax breaks, dealing with them  “takes a great deal of political will because, almost by definition, these exemptions are enjoyed by groups and institutions that have successfully had a voice in the legislature, and it’s hard to undo a benefit program, whether it’s a Mainecare entitlement or a tax credit.”

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