Maine Governor Paul LePage, a Tea Party favorite who since January has presided over the state government's switch from all-Democratic to all-Republican rule, signed his first budget into law on Monday (June 20).
The two-year, $6.1 billion plan is not as austere as the one LePage had sought, but still has majority Republicans glowing as it slashes taxes by $150 million, phases out a Democratic-backed health care plan, cuts back on pension benefits for state workers and makes conservative-backed changes to the state's welfare system.
Republicans are calling the budget's tax cuts the largest in state history. The state's top income tax rate will decline from 8.5 percent to 7.95 percent, with 70,000 low-income residents expected to pay no income tax at all under the change. Businesses will enjoy more tax exemptions, while an estate tax exemption will double from $1 million to $2 million, according to The Morning Sentinel of Waterville.
Like many other states, Maine also will become less generous with the pensions it offers to state workers. The new budget freezes cost-of-living increases for retirees and caps future increases at 3 percent, The Morning Sentinel notes.
The spending plan also phases out Dirigo Health, a 2004 state experiment in near-universal health care, by January 1, 2014. LePage has criticized the plan as too costly.
Welfare changes include the elimination of some benefits for legal noncitizens, as well as the cancellation, after five years, of federal money provided to low-income households under the Temporary Assistance for Needy Families program. On Monday, LePage hailed the welfare changes as necessary to erasing what he called Maine's reputation as a "welfare destination state," and indicated that more adjustments would be coming in the future.
"We must continue to make these types of changes to the system, not only to achieve significant savings, but to encourage Mainers to become self-sufficient," he said, according to The Morning Sentinel . "This is a down payment on welfare reform and, after implementing these changes and gauging the results, I look forward to doing more."