A group of Republican lawmakers are looking to eliminate Maine’s income tax and require the state to develop zero-based budgets for the next two bienniums.
Under the proposed law, the state government would be prohibited from collecting income tax from residents as of January 1, 2026.
The state would also be directed to develop a zero-based budgets for fiscal years 2026-27 and 2028-29. From that point on, all departments and agencies in the Executive, Legislative and Judicial Departments of State Government would be required to create a zero-based budget at least once every eight years.
For the purposes of this legislation, “zero-based budgeting” refers to a method of budgeting where all “programs and activities are justified for a budgetary period using cost-benefit analysis without regard to the amount that was budgeted for those programs and activities in a prior budgetary period.”
In other words, all corners of the state government would regularly be required to reconsider all aspects of their spending and rebuild their budgets from the ground up.
This technique has often been championed by fiscal conservatives as a means by which to restrain the growth of government spending.
During off-years, departments and agencies would need to undertake “targeted budgeting or a similar alternative” that include, at a minimum, recommendations for five percent and 10 percent spending reductions.
This bill, LD 671, was sponsored by Rep. Laurel Libby (R-Auburn) and cosponsored by Sen. David Haggan (R-Penobscot), Rep. David Boyer (R-Poland), Rep. Kimberly Haggan (R-Hampden), Rep. Arthur Kevin Mingo (R-Calais), Rep. Joshua Morris (R-Turner), and Rep. Rolf Olsen (R-Raymond).
Click Here for More Information on LD 671
Nearly identical legislation was introduced by Rep. Libby during the previous session, but its passage was ultimately halted by the Democrat-controlled legislature.
“Rather than continuing to build layer after layer of spending with no consideration for its effectiveness, the Legislature should be able to examine the underlying programmatic costs where funding is being continued,” Libby said at the time, referring to the provisions establishing a zero-based budgeting system.
Concerning the elimination of the state income tax, she suggested that the state was facing a spending crisis, “one that has grown state government while failing to fix the growing list of issues facing Mainers.”
“Issues like child abuse, drug addiction, homelessness, and ensuring basic educational competency,” she continued. “These are all issues that have received record funding in recent years while the impacts of those investments by Maine taxpayers make it clear we must reassess the status quo.”
Chase Hewitt, staff attorney for the Maine Revenue Service’s Office of Tax Policy, testified in opposition to the bill at the time, arguing that the state income tax helps to “prevent overreliance on revenue from property and sales and use taxes” and “add progressivity to the overall State tax system.”
[RELATED: Maine Senate Kills Bill Eliminating State Income Tax]
A public hearing for LD 671 has been scheduled for Wednesday, March 5 at 1pm before the Legislature’s Taxation Committee in Room 127 of the State House.
Testimony may also be submitted virtually at: www.mainelegislature.org/testimony
