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June 16, 2011

Budget wins initial OK

By Mainebiz News Staff

Lawmakers have preliminarily approved the state's two-year, $6.1 billion budget that contains all of the general prerogatives spelled out by Gov. Paul LePage's administration months ago, with some amendments.

The budget cuts taxes by $150 million, down from LePage's goal of $203 million, and lowers Maine's top income tax rate from 8% to 7.95%. It increases personal and standard tax deductions for lower-income Mainers and doubles Maine's exemption to the estate tax from $1 million to $2 million, the Bangor Daily News reports.

The budget also seeks to reform welfare by imposing a five-year, lifetime cap on beneficiaries and eliminating eligibility for some legal immigrants. To pay down a $4 billion unfunded liability in the state pension system, the budget includes a one-year freeze on increases in state worker pensions and caps cost-of-living increases in the state retirement system at 3%, the paper reported.

Democrats argued that the tax cuts are being paid for with sacrifices from public employees and retirees, and that the tax changes will produce a $300 million hole in the next biennial budget, the paper reported.

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