Taxes hiked on tobacco and cannabis in Maine to plug revenue gaps

(The Center Square) — Mainers will pay more for cigarettes, cannabis and streaming services under a supplemental state budget approved by the Democratic-led Legislature.

The $320 million plan, sent to Gov. Janet Mills' desk on Wednesday, seeks to plug revenue gaps in a $11.3 billion state budget approved in April and address a shortfall in the state's Medicaid program while boosting funding for child welfare programs, housing, and other initiatives.

To pay for it, the measure includes a slate of tax increases on products like tobacco, cannabis, online streaming services, paint, as well as higher fees for hunting and fishing licenses.

"This budget meets the moment," state Rep. Drew Gattine, D-Westbrook, said Wednesday in remarks ahead of the bill's final passage. "It addresses the biggest issues Maine people are facing, and protects critical investments we have made in the past in health care, food security, education, housing and child care."

But Republicans, who were largely locked out of the budget decision-making process, accused Democrats of waging a "war on the poor" by increasing taxes to plug gaps in the spending plan and expand government.

State Sen. Bruce Bickford, R-Androscoggin, blasted the plan as a "tax and spend budget that continues to grow state government at the expense of the taxpayer" while ignoring the root causes of the state's revenue shortfalls.

"Mainers already experience the fifth highest tax burden in the country," he said. "When are legislative democrats going to wake up and realize that enough is enough, and it's time to stop bleeding Mainers dry."

Republicans were gathering signatures on an online petition that called for "people's veto" of the budget by putting the spending package up for a vote by public referendum. But they fell short of the required number of signatures to get on the ballot.

In March, Democrats used their majority to push through a two-year $11.3 billion "continuing services" budget that continues to fund 55% of public education and provides $122 million to help stabilize the MaineCare program. The supplemental spending plan approved this week is the second part of that budget and includes an additional $320 million in spending.

Mills, a Democrat, had called for a $1 per pack increase on cigarette taxes, but lawmakers approved a $1.50 increase that would bring the total tax on a pack of smokes to $3.50.

Other tax plans set new charges for internet streaming services, private pensions, and a 50-cent tax per gallon of paint sold in the state, to generate more revenue.

Concerns about the tax provisions also prompted a rebellion by a small group of six Democrats who initially voted with Republicans against the spending plan. They eventually changed their votes during final votes on the budget.

"This proposed budget is balanced on the backs of some of Maine's poorest residents through regressive taxation. Full stop," state Rep. Nina Milliken, D-Blue Hill, said Wednesday in remarks. "We owe it to our constituents to do better — to tax people who are super wealthy, so that the poorest people in our community see some relief."