Maine lawmakers pass $1.6 billion ‘messaging bill' to reverse cuts to state pension system
Maine Legislators said they hope to send a message about the importance of public service with the passage of a bill that would undo previous cuts to the state pension system — to the tune of more than $1.6 billion.
In 2011, the Legislature and former Gov. Paul LePage made changes to the state pension system that capped cost of living adjustments at 3% and restricted that increase so that it would only apply to the first $20,000 (which has now increased to $24,000) of pension income. At the time, those cuts helped the state lower the top marginal individual income tax rate from 8.5% to 7.15%.
The House voted 81-66 on Wednesday following the Senate's 22-12 vote on Tuesday in favor of legislation (LD 900) that would undo some of those changes and tie the Public Employees Retirement System to the Consumer Price Index in an effort to help retirement accounts keep pace with inflation.
Speaking from the chamber floor Tuesday, Sen. Mike Tipping (D-Penobscot) noted the bill has a fiscal note of more than $1.6 billion due to the state pension system not having enough assets to cover the future cost of those changes.
'I have every confidence that my colleagues on the Appropriations and Financial Affairs Committee will find that money,' Tipping joked, 'but regardless of how it works out, this is an important reminder of how much we've taken from retirees to pay for tax breaks for the wealthy.'
However, critics said passing a bill with such a price tag would be irresponsible.
'We must legislate responsibly, balancing our obligations to retirees with a broader need for Maine's working families, businesses and public services,' Rep. Mike Soboleski (R-Phillips) said during the House debate, adding that if funded the bill would likely divert resources from education, health care, and other priorities.
Rep. Amy Roeder (D-Bangor) said although the bill is likely going to die on the appropriations table, where legislation not included in the budget vies for remaining funds at the end of session, she won't stop fighting for pensions. 'Every year we fail to restore these pensions, we are complicit in perpetuating the injustice,' she said.
Bill sponsor Sen. Joe Baldacci (D-Bangor) said over the last 15 years 'employees of the state have been shortchanged significantly,' noting the thousands of retired teachers and public workers impacted by the current structure. His hope is that over successive legislatures, this issue becomes a priority.
Before advancing to either the governor's desk or the appropriations table, the bill will go back to both chambers for final enactment votes.
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San Francisco Chronicle
16 minutes ago
- San Francisco Chronicle
Trump just floated a tax idea that would hugely benefit California homeowners
President Donald Trump just floated an idea that could benefit more homeowners in California than in any other state: eliminating the capital gains tax on the sale of a primary home. Under current law, homeowners who sell their primary home pay nothing on their first $250,000 (single filers) or $500,000 (married filing jointly) in profits. Anything over that is taxed as a capital gain. Those limits have not changed since the law that created them took effect in May 1997. Had they increased along with the Consumer Price Index, they would be double that now. California has, by far, more homes exceeding the current limits than any other state. Between 2017 and 2023, California accounted for 37% of all sales nationwide that had gross capital gains exceeding $500,000, even though it made up only 10% of all home sales, according to a study last year by Cotality. Rather than sell and pay capital gains tax – which could be as much as 33% in federal and California taxes combined – many long-term homeowners plan to stay put until they die, even if their home no longer suits them. Upon their death, all of the appreciation that occurred during their lifetime will be tax-free, thanks to a tax benefit known as the 'step-up in basis." Real estate agents say this 'lock-in' effect is slowing home sales and driving up prices in high-cost markets. 'We have had the most appreciation in the nation coupled with the highest capital gains rate in the nation when you count state and federal,' said Silicon Valley Realtor Ken DeLeon. 'I have a client, he has Alzheimer's, he should really be in a care home, but he has a highly appreciated home and he's choosing not to sell.' He noted that In Santa Clara County, single-family home sales fell fairly steadily from 24,174 in 2001 to 10,102 in 2024. In San Mateo County, they fell from 8,878 to 4,471, DeLeon said. About two weeks ago, Rep. Marjorie Taylor Greene, R-Ga., introduced a bill, the No Tax on Home Sales Act, that would eliminate capital gains taxes on primary home sales. During a press conference Tuesday, Trump was asked, 'How important is it we have no tax on home sales, capital gains to unleash the housing market in this country?' His response: 'Well, we're thinking about that. But it would also unleash it just by lowering the interest rates.' Congress would have to approve any change or elimination of the capital gains tax on homes. If it did, the California Legislature would have to decide whether or not to conform to the new federal law for state taxes. Most federal legislators from California contacted for this article – including Sens. Alex Padilla and Adam Schiff and Rep. Nancy Pelosi – did not respond or declined to comment on Trump's idea until he puts forth a proposal. But a couple did acknowledge the need for change. Rep. Mike Thompson, D-Napa, said via email that there are areas of the state and nation where rising property values 'are making the capital gains tax a barrier for many empty nesters and retirees seeking to sell their homes or downsize. This has worsened California's housing crisis, leaving too many houses off the market … As Ranking Member of the (House) Tax Subcommittee, I support solutions that would address these issues, including raising the current exemption for the capital gains tax." Considering how many tax breaks Congress just granted in the One Big Beautiful Bill Act, it's not clear how much support there is for legislation that would mainly benefit wealthy homeowners. Double the exemption? A more modest bill, the ' More Homes on the Market Act,' would double the existing exemptions to $500,000 for singles and $1 million for couples and index them to inflation. Rep. Jimmy Panetta, D-Santa Cruz, reintroduced the bill in February after it died in 2023, despite having broad bipartisan support. In an emailed statement, Panetta said, 'It's a good thing that the President is finally acknowledging the seriousness of the affordable housing issue…' and that he is 'willing to work with anyone on solutions for my constituents…especially when it comes to our bipartisan bill.' Asked whether he favors eliminating the capital gains tax on homes, his office said Panetta would first have to review any such legislation and the analysis. Doubling the exemption would wipe out the tax for most homeowners, but 'in the Bay Area and California, you would need to quadruple it, to $2 million,' DeLeon said. Since May 1997, the median price of a single-family home nationwide has risen by almost 250% to $441,500, according to National Association of Realtors data. But in California, it shot up 386% to almost $900,000, and in San Francisco County, it soared about 500% to $1.75 million, based on California Association of Realtors data. The old rules Freeing up inventory was also one of the main reasons behind the tax law change in 1997. Under the old law, when sellers made a profit on their primary residence, the tax was deferred (not forgiven) if they purchased a replacement home within a specified time and the new house cost at least as much as the sales price on the old home. A homeowner could continue rolling the untaxed profit from one house to another, as long as they kept buying more expensive homes. If and when they sold a home, all of the accumulated untaxed gains would become taxable. If they left it to their heirs, the gains up until the owner's death generally would escape capital gains tax because of the step-up in basis. The old law also let people 55 or older sell their primary home and exclude up to $125,000 (married or single) in accumulated profits, but only once in a lifetime. As a result, homeowners had to keep meticulous recordkeeping from every house they owned. Some lawmakers and academics believed the law created distortions in the market, such as discouraging homeowners from downsizing, moving into rental housing or from higher-cost to lower-cost markets as their circumstances changed. The new rules The Taxpayer Relief Act of 1997 was intended to reduce these distortions, stimulate sales, simplify recordkeeping and eliminate capital gains taxes for almost all homeowners. It exempted the first $250,000/$500,000 in profits from capital gains tax, whether or not the seller bought a new house. Profit is what's left after you subtract what you paid for the house and eligible improvements from your sales price minus commissions and other selling expenses. Taxpayers with gains under the limits generally do not have to report the sale on their tax return. Any profit over the exemption is taxed as a capital gain. The federal rate on long-term capital gains is 0%, 15% or 20% depending on income. That's lower than the rate on 'ordinary income,' such as from a job or self-employment. A large taxable gain from the sale of a home could also trigger an additional 3.8% 'net investment income tax.' A bulge in income can also force some seniors to pay substantially more for Medicare for one year. California also excludes the first $250,000/$500,000 from the sale of a primary home, but it taxes capital gains just like ordinary income, at rates up to 13.3%. Homeowners can use this exemption as often as every two years, as long as each home has been their primary residence for at least two out of five years before the sale. What happened after 1997? Initially, the new law did eliminate tax for the vast majority of homeowners, but as home prices soared, so did the number who owed tax. Between 2000 and 2003 – a few years after the rule change – only about 38,000 home sales per year nationwide, or 1.3% of all existing home sales, had gross capital gains (excluding homeowner improvements) that exceeded $500,000, according to Cotality. By the end of 2023, almost 230,000 homes or 7.9% of all home sales nationwide – and almost 29% in California – were over the limit. A study commissioned by the National Association of Realtors found that 34% of homeowners today could already exceed $250,000 in capital gains and 10% have potential gains above $500,000. Those numbers could be 56% and 23%, respectively, by 2030 and nearly 70% and 38% by 2035. 'These outdated (exemption) thresholds are already distorting the housing market and locking up inventory, and it is getting worse every year,' the association wrote. What research says Several academic studies found that the tax law change in 1997 did increase housing turnover, and may have contributed to the sharp runup in home prices from the early 2000s until 2008, when the bubble burst. The Taxpayer Relief Act of 1997 'played a significant role in facilitating the boom in the residential real estate market that began shortly after its enactment,' Pete H. Oppenheimer, then a professor at the University of North Georgia, wrote in a 2014 paper. It created an opportunity for homeowners to receive tax free income when they resold their principal residences, which made homeownership more attractive and caused the real estate market to 'expand in volume and price,' he added. It also helped 'real estate investors and professionals to achieve tax free income … by converting rental property into a personal residence.' A Federal Reserve study published in 2008 concluded that the 1997 Act 'reversed the lock-in effect of capital gains taxes on houses with low and moderate capital gains.' However, it 'may have generated an unintended lock-in effect on houses with capital gains over the maximum exclusion amount.' Its author Hui Shan found that the short-term effect was 'much larger' than the long-term effect. A 2011 paper by Andrea Heuson and Gary Painter also found that housing turnover 'increased significantly' after 1997. 'The surprising result is how broad based the change in trading behavior is, appearing across all age ranges and impacting both trading up and trading down,' they wrote. Based on his past research, Painter predicted that eliminating the tax on home sales would increase sales. When he left his job at the University of Southern California to teach at the University of Cincinnati, Painter kept his home near Long Beach and rented it out because he didn't want to pay capital gains tax, but also in case he wanted to return to California one day. It's not just capital gains tax Capital gains are not the only culprit locking up inventory. Many homeowners with mortgages around 3% are reluctant to move, now that rates are hovering around 6% to 7%. That is the 'big 1,000-pound gorilla that has reduced mobility," Painter said. And in California, many sellers would face a big increase in their property tax assessment if they sold a long-held home and bought another. Proposition 19, passed by voters in 2020, was supposed to boost inventory by making it easier for people 55 or older to transfer their assessment from their current home to a new one, thus avoiding or reducing a property-tax increase. It also made it harder for children to keep a parent's low property tax base on an inherited home. It appears that more Bay Area seniors did move after Prop. 19 took effect, at least in the first few years. But results varied by county and the effects wore off over time. In Contra Costa, requests by seniors for Prop. 19 transfers went from around 200 per year before 2020 to about 1,000 a year after two years, but since then has tapered off to around 600 a year, said Gus Kramer, the county's assessor. In Santa Clara County, Prop. 19 'has been a lot less successful than anticipated. The biggest negative by far is capital gains,' DeLeon said. Unintended consequences If Congress eliminated capital gains tax on homes, Painter believes more people would move out of California. For people contemplating a move, losing their low property-tax base 'is not an issue, but (capital gains) taxes are. This would be an opportunity to cash in on their equity,' he said. And instead of making homes more affordable, it could increase prices. 'More generous tax treatment of homes could bid up home prices on the demand side, exacerbating concerns about housing affordability,' Joseph Rosenberg , a senior fellow with the Urban-Brookings Tax Policy Center, said via email. San Francisco Chief Economist Ted Egan concurs. 'The expectation of reduced taxes upon sale would likely result in modest upward pressure on housing prices in places, like San Francisco, where profits on home sales often exceed the threshold,' he said via email. 'This in turn would lead to a modest increase in property taxes.'
Hamilton Spectator
41 minutes ago
- Hamilton Spectator
Philippine Supreme Court rules impeachment bid against vice president is unconstitutional
MANILA, Philippines (AP) — The Philippine Supreme Court ruled Friday that an impeachment case filed against Vice President Sara Duterte violated the country's constitution due to a key technicality, a decision that blocks her upcoming trial over a raft of criminal allegations including her threat to have the president assassinated. The House of Representatives, which impeached Duterte in February and sent the case to the Senate for trial, violated a rule that only one impeachment case could be processed by the lower chamber against an impeachable official in a single year, court spokesperson Camille Ting said. The House received at least four separate impeachment cases against Duterte between December and February but only one was transmitted to the Senate, which would have served as an impeachment tribunal. The other three impeachment cases were placed in the House's order of business but were archived with no action and 'effectively dismissed,' according to the ruling. The ruling was 'immediately executory,' the court said. 'It is not our duty to favor any political result,' the court said in a statement, suggesting it did not pass judgement on the array of allegations. 'Ours is to ensure that politics are framed within the rule of just law.' Duterte's lawyers welcomed the decision, which they said upheld the rule of law. 'We remain prepared to address the allegations at the proper time and before the appropriate forum,' the attorneys in a statement. Duterte, 47, became the first vice president of the Philippines to be impeached by the House in February over an array of alleged high crimes. The accusations were led by her threat during a November online news conference to have President Ferdinand Marcos Jr., his wife and cousin, then-House Speaker Martin Romualdez, killed by an assassin if she were killed herself during her high-profile disputes with them. The daughter of Marcos' controversial predecessor, Rodrigo Duterte , she also has been accused of large-scale corruption, sedition, terrorism and failing to openly support Philippine government efforts to oppose and denounce China's aggressive actions against Filipino forces in the disputed South China Sea . Duterte allegedly backed her father's brutal crackdowns against illegal drugs that led to extrajudicial killings in their southern home city. Her impeachment trial was set to begin either next week or early next month by the 24-member Senate, which has convened to hear the case. If the Supreme Court ruling becomes final, the vice president's opponents could file another impeachment case after a year. Duterte ran as Marcos's running mate in 2022 on a campaign battle cry of unity in their deeply divided and poverty-stricken Southeast Asian country. Both were scions of strongmen accused of human rights violations, but their strong regional bases of political support combined to give them landslide victories. Their whirlwind political alliance, however, rapidly frayed when they took office. Duterte's father openly accused Marcos of being a weak leader and a drug addict even during the campaign, allegations the president denied. The vice president later resigned from her then-concurrent Cabinet post as educations secretary as the rifts between the two political families deepened. She later accused Marcos, his wife and Romualdez of corruption, weak leadership and attempting to muzzle her because of speculation she may seek the presidency in 2028 when Marcos's six-year term ends. Duterte made the comment about killing Marcos and his family members during a Nov. 23 news conference, a threat she warned wasn't a joke. Faced with the prospects of criminal lawsuits, Duterte later said she wasn't threatening him but was expressing concern for her own safety. Still, her statements set off a criminal investigation and national security concerns and prompted calls for her impeachment. Among the impeachment complaint signatories was the president's son, Rep. Sandro Marcos, and Romualdez. The petition urged the Senate to shift into an impeachment court to try the vice president, 'render a judgement of conviction,' remove her from office and ban her from holding public office. 'Duterte's conduct throughout her tenure clearly displays gross faithlessness against public trust and a tyrannical abuse of power that, taken together, showcases her gross unfitness to hold public office and her infidelity to the laws and the 1987 Constitution,' the complaint said. Last month, senators voted to send the raft of complaints back to the House due to legal questions, sparking street protests demanding Duterte's immediate trial. Then-Senate President Chiz Escudero said the move led by Duterte's allies in the Senate did not mean the impeachment complaint was being dismissed and issued a summons for Duterte to appear when the trial proceeds. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
San Francisco Chronicle
an hour ago
- San Francisco Chronicle
Rep. Ralph Norman, among House's most conservative, set to enter South Carolina governor's race
CHAPIN, S.C. (AP) — Rep. Ralph Norman, among the most conservative Republicans in the U.S. House, is entering South Carolina's 2026 governor's race. The wealthy real estate developer and longtime ally of former Gov. Nikki Haley is expected to file his candidacy paperwork with state officials on Friday, his campaign told The Associated Press. Norman has long been mulling a campaign for the state's highest office. But unlike several of his fellow candidates, he's not expected to seek the endorsement of the Republican whose backing in South Carolina GOP politics matters most: President Donald Trump. Norman, 72, joins several other announced candidates, including Attorney General Alan Wilson and Lt. Gov. Pamela Evette, in the race for next June's GOP primary, and Rep. Nancy Mace of South Carolina's 1st District is soon expected to announce her campaign. All three have touted their ties to Trump, who has maintained popularity in the state since his 2016 primary win there helped cement his status as the GOP presidential nominee. Representing South Carolina's 5th District, Norman stridently backed Trump during his first term, voting against both House impeachments of the president. During the Jan. 6, 2021, assault on the U.S. Capitol by a mob of Trump supporters, he urged the then-president to declare 'Marshall Law' in a text to White House chief of staff Mark Meadows — misstating the term martial law even as he called for upending the peaceful transfer of power. But in the 2024 presidential campaign, Norman was one of only two House members nationwide to endorse Haley's candidacy. The former South Carolina governor, who served as Trump's United Nations ambassador, was his last primary challenger to depart the race, and Norman frequently appeared with her along the campaign trail. Both elected to the state House in 2004, Norman and Haley became legislative allies, and Norman was among few elected officials who backed Haley's insurgent, and ultimately successful, 2010 gubernatorial bid. In the 2024 presidential campaign, Norman in part argued that Haley could serve two full terms, while Trump could only go on to serve one. Norman has frequently operated outside the mainstream even among his home state's GOP circles. In 2018, as Gov. Henry McMaster — with Trump's backing — faced several primary challengers as he sought his first full term in office after succeeding Haley as governor, Norman endorsed Catherine Templeton, an attorney who had served Haley's gubernatorial administration in several capacities. Norman has long been a member of the House Freedom Caucus, comprised of the chamber's most conservative members. According to the deficit hawk has traditionally ranked as the state's most conservative U.S. House member and among the top most conservative members nationwide, based on his legislative activity. He has been in the U.S. House since winning a 2017 special election to replace Mick Mulvaney, whom Trump appointed to lead the Office of Management and Budget. In 2018, South Carolina Democrats called for felony charges after Norman pulled out his own loaded handgun during a meeting with constituents to make a point about gun safety. Attorney General Alan Wilson — who is also seeking next year's GOP gubernatorial nomination — declined to press charges. During the COVID-19 pandemic, Norman, Rep. Marjorie Taylor Greene of Georgia and Rep. Thomas Massie of Kentucky were fined $500 apiece for not wearing face coverings on the House floor, which was a requirement at the time. They sued Democratic then-House Speaker Nancy Pelosi, subsequently losing an appeal over the incident.
