AUGUSTA, Maine (AP) — Democratic Gov. Janet Mills contends the state cannot afford to fully mirror federal tax cuts on pandemic aid that funneled into Maine, saying it would cost $100 million to do so.
Billions of dollars in federal pandemic relief flowed into Maine, and the federal government opted against taxing the forgivable loans under the Paycheck Protection Program and other grants to businesses.
But the federal government went even further by allowing business owners to deduct the expenses they paid with the money, extending the impact of the stimulus but hurting state budgets in the process.
The federal government didn’t take into account implications for states, said Kirsten Figueroa, the state’s budget commissioner.
“Without additional funding to the states to pay for this effort, this is a conformity provision that is challenging state governments across the nation,” Figueroa told lawmakers on Monday.
Legislative Republicans said the governor should find a way to avoid further harm to struggling businesses.
“These small businesses are barely hanging on as it is. Taking away the savings that they have set aside to get through this winter and spring would be devastating,” said Jeff Timberlake, Senate Republican leader.
It’s possible that the federal government could help reimburse states for mirroring the tax cuts with another round of aid, but there’s no guarantee that will happen, officials said.
The so-called conformity plan came up for discuss as the Appropriations Committee took up the governor’s two-year, $8.4 billion budget.
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