By State Senator Bill Diamond

After countless hours spent over the last five months, the Maine Legislature has passed a budget for the next two years.

In a strong show of bipartisanship, the Appropriations Committee unanimously endorsed the budget, which went on to pass both the House and the Senate by large margins.

Given the economic climate and the new leadership at the State House, it is a very tight budget, and I have no doubt that it will cause some hardship. Still, it is a vast improvement over the original proposal from the governor, and I sincerely believe it is as good as could be achieved in the current circumstances. This week, I’d like to share some of the major points of this budget.

State Employees and Retirees (including teachers): I heard more from my constituents about this than any other topic this spring. The major change here concerns cost of living adjustments (COLAs). These are the annual adjustments made to pay and retirement benefits to keep pace with inflation. There will be a three-year freeze on COLAs for current and retired employees, and after that there will be a permanent 3% cap on COLAs for both retirees and active employees.

Additionally, for retirees, the COLA will only apply to the first $20,000 of the pension. This was a real sticking point, as some of us tried to get this increased to $25,000, which would cover the entire pension of most of the affected retirees, but $20,000 was the best we could negotiate. Understanding the pain this will cause, we hope to correct this in the future.

In the interim, there will be a one-time per year COLA-like payment to retirees to be paid out of any available end-of-year surplus. This payment will not be added on to the base of a pension like a normal COLA, however.

Additionally, the budget will increase the retirement age for new employees and unvested employees to 65, all vested state employees can retire at their normal retirement age of either 60 or 62. There is also a two-year freeze on merit pay increases for state employees and an end to unpaid shutdown days.

Health and Human Services: Many cuts were proposed for Health and Human Services in the original budget proposal, and I am pleased to say that, while there were still serious reductions we managed to maintain a critical safety net for Maine’s most vulnerable citizens.

We maintained health care coverage for low-income singles, a group that includes many homeless veterans. Additionally, funding was restored for low cost drugs for the elderly, and home visits for young parents (a program which has drastically reduced “shaken baby” cases in the state). There is now a five-year time limit for TANF (Temporary Assistance for Needy Families — cash assistance for very low income families, what people commonly think of as “welfare”) with exemptions for the elderly and those with disabilities.

Taxes: The income tax rate will be reduced in 2013, and Maine tax code will now conform with federal tax provisions for personal exemptions, standard deductions, and for those who are Married Filing Jointly. There is also a 20% reduction in funding for the Circuit Breaker property tax and rent rebate program.

Other changes in the budget include a Streamlining Commission tasked with finding $25 million of savings in state government, and the proposed elimination of funding for MPBN is now a $200,000 cut (out of $4 million in state funding.) The Highway Fund, while still underfunded, will receive $3.2 million from car rental sales tax revenues to fund non-highway projects such as rail, aviation and public transit. This is not a new tax, but merely a shifting of existing revenues. This money will draw a match of $57 million in federal funds.

While far from perfect, this budget is a truly impressive achievement. If you have any comments on the budget, or if there is anything else you’d like to discuss with me, you can call my office at the State House at 287-1515 or visit my website at www.mainesenate.org/diamond to send me an e-mail.

Senator Bill Diamond is a resident of Windham, and serves the District 12 communities of Casco, Frye Island, Raymond, Standish, Windham and Hollis.