An Act To Require the Review of Proposed Tax Expenditures
Maine Legislature, Session 125, LD 1730
Committee: Taxation
Sponsors: HASTINGS
Amends: 36 MRSA §199-A, 36 MRSA §199-E

Legislative Document 
No. 1730
S.P. 590 
In Senate, January 4, 2012
An Act To Require the Review of Proposed Tax Expenditures 
Submitted by the Joint Standing Committee on Taxation pursuant to the Maine Revised 
Statutes, Title 36, section 199-D. 
Reference to the Committee on Taxation suggested and ordered printed. 
JOSEPH G. CARLETON, JR. 
Secretary of the Senate 
Presented by Senator HASTINGS of Oxford. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §199-A, sub-§1-A is enacted to read: 
1-A.  Legislative initiative.  "Legislative initiative" means a matter requiring 
legislative action, including, but not limited to, an item included in a biennial or 
supplemental budget. 
Sec. 2.  36 MRSA §199-E is enacted to read: 
§199-E.  Review of proposed tax expenditures 
1.  Committee evaluation.  Whenever legislation or a legislative initiative proposes a 
new tax expenditure or proposes a change that prolongs or expands an existing tax 
expenditure, the committee shall, to the extent that the information is available, consider 
the following when evaluating whether the tax expenditure should be enacted, prolonged 
or expanded: 
A.  The classes of individuals, types of organizations or types of industries whose 
state tax liabilities are directly affected by the tax expenditure as well as the number 
of taxpayers affected; 
B.  Public policy objectives that provide a justification for the tax expenditure, 
including, but not limited to, the extent to which the tax expenditure attracts business, 
encourages local investment and spending or has a significant statewide impact on 
quality of life or social goals; 
C.  Projections of the fiscal impact of the tax expenditure, including but not limited to 
any necessary explanation of state revenue loss and whether there is any proposal to 
offset a revenue loss; 
D.  The impact the tax expenditure may have on consumer and business spending 
patterns as well as the general effect the tax expenditure may have on the overall state 
economy; 
E.  Unintended benefits or negative consequences the tax expenditure may have on an 
individual, organization or industry other than that specifically targeted in the 
legislation or legislative initiative; 
F.  Similar tax expenditures adopted in other states and potential competitive benefits 
of the tax expenditure; 
G.   Standards for accountability or reporting requirements for the recipient of the tax 
expenditure and the extent to which the standards or reporting requirements are 
included in the legislation or legislative initiative; 
H.  Methods for evaluating the tax expenditure, the cost of data collection and 
analysis for the evaluation of the tax expenditure and the extent to which a process 
for evaluation of the tax expenditure is included in the legislation or legislative 
initiative; and 
I.  The administrative ease of adjusting or recapturing the tax expenditure if the 
objectives are not fulfilled and whether a mechanism for adjusting or recapturing is 
included in the legislation or legislative initiative. 
2.  Repeal and review.  Legislation or a legislative initiative that proposes a new tax 
expenditure or proposes a change that prolongs or expands an existing tax expenditure 
must include a repeal date and provide for a review process to be used in evaluating the 
tax expenditure. 
3.  Procedures for legislative committees.  Whenever legislation or a legislative 
initiative proposes a new tax expenditure or a change that prolongs or expands an existing 
tax expenditure, the joint standing committee of the Legislature having jurisdiction over 
the proposal shall hold a public hearing and determine the level of support for the 
proposal among the members of that committee.  If there is support for the proposal 
among a majority of the members of the committee of jurisdiction, the chairs of the 
committee of jurisdiction shall request the joint standing committee of the Legislature 
having jurisdiction over taxation matters to review and evaluate the legislation or 
legislative initiative pursuant to subsection 1 and shall provide the information necessary 
to evaluate the legislation or legislative initiative.  The joint standing committee of the 
Legislature having jurisdiction over taxation matters shall review and evaluate the 
legislation or legislative initiative pursuant to subsection 1 and report to the committee of 
jurisdiction with an advisory opinion. A proposed new tax expenditure or a change that 
prolongs or expands an existing tax expenditure may not be enacted into law unless the 
review and evaluation pursuant to subsection 1 have been completed. 
SUMMARY 
This bill creates a review process to be performed by the joint standing committee of 
the Legislature having jurisdiction over taxation matters prior to the enactment of 
legislation or approval of a legislative initiative that would result in a new tax expenditure 
or a change that prolongs or expands an existing tax expenditure.  The bill requires that 
committee to consider the groups and numbers of taxpayers affected, the public policy 
objectives that provide justification for the proposed tax expenditure, fiscal impact 
projections related to the proposed tax expenditure, effects the proposed tax expenditure 
may have on the economy, unintended benefits or negative consequences of the proposed 
tax expenditure, similar tax expenditures in other states, standards of accountability or 
reporting requirements related to the proposed tax expenditure, methods for evaluating 
the proposed tax expenditure and mechanisms for recapturing the proposed tax 
expenditure if objectives are not fulfilled.  The bill requires proposals for a new tax 
expenditure or a change that prolongs or expands an existing tax expenditure to include a 
repeal date and a review process for the tax expenditure.  The bill requires the joint 
standing committee of the Legislature having jurisdiction over a proposal for a new tax 
expenditure or a change that prolongs or expands an existing tax expenditure to seek an 
advisory opinion from the joint standing committee of the Legislature having jurisdiction 
over taxation matters prior to enacting legislation or recommending a legislative initiative 
that would result in a new tax expenditure or a change that prolongs or expands an 
existing tax expenditure.