AUGUSTA — Lisa’s Restaurant owner Lisa Wardwell said a proposed increase in the meals tax will mean the locals who frequent her neighborhood bar will be less likely to eat out as often.

“If they are going out to eat three times a month, they’ll go out two times a month,” she said Friday just before her lunch rush began.

Additional Photos

Scott Cowger Staff file photo by Andy Molloy

Wardwell, whose Bangor Street business has been running since 2005, said she understands the state needs to balance its budget, but she thinks there’s a better way.

“They’ve taxed the smoker to death, and now they’re coming after restaurants,” she said. “Don’t tax me. Cut your spending.”

The Legislature’s Appropriations Committee gave unanimous, bipartisan support early Friday to a compromise two-year state budget that proposes to raise the meals-and-lodging tax by 1 percent and increase the general sales tax by 0.5 percent. The hikes are scheduled to end in two years and are designed to restore cuts to municipal aid that local officials said would force them to raise property taxes.

The budget also temporarily restores longevity and merit pay for state workers. It faces House and Senate votes — and consideration by Gov. Paul LePage — before it becomes final.

Scott Cowger, a former Democratic state lawmaker who co-owns Maple Hill Farm Bed & Breakfast Inn and Conference Center in Hallowell, said while coastal and southern Maine businesses rely on tourists, those inland often cater to Mainers. So while tax experts argue that raising the meals and lodging taxes will affect wealthy tourists from away the most, Cowger said that’s not true for his business.

“In our business, the vast majority of our guests are Maine people,” he said. “We do a lot of weddings and events for folks who live here in Maine.”

Cowger, who served on the Appropriations Committee 10 years ago while a member of the House, said he knows the struggles of balancing a state budget. He said the 0.5 percent increase in the general sales tax helps spread the pain beyond just the meals and lodging industry.

“It’s a tough economy still,” he said. “We certainly haven’t rebounded from the best years we had in lodging.”

For cities and towns, the committee proposal blunts much of the proposed cut to revenue sharing. However, municipalities still will see less revenue than anticipated. In Augusta, that looks like a $550,000 to $600,000 hit, City Manager William Bridgeo said.

He said he probably will recommend to City Council members that they take additional money out of the city’s remaining fund balance and revisit the issue in August, which is just after the start of the July 1 fiscal year.

“I don’t know where you go for $600,000 in additional cuts,” he said.

Larry Fleury, a real estate agent who owns several rental properties in Augusta, said he’s relieved to know that the proposed budget restores much of revenue sharing cut proposed by LePage. As a major property owner, he said it’s hard enough to pay property taxes each year.

“We have a lot of elderly, low-income people who are just hanging on by a thread in their own homes,” he said.

Fleury also is president of the Augusta Downtown Alliance, which includes restaurants and lodging. He said those business owners are “probably fuming over this.”

“It’s a really tough situation this year,” he said. “The state has run out of money.”

Ginette Rivard, president of the Maine State Employees Association, said many state workers have gone without raises since 2009 and have worked two years without a contract. The restoration of longevity pay and merit pay is a significant step forward, she said.

“There’s a serious recruitment and retention problem and hopefully this will help address that,” she said.

Roger Bintliff, general manager of the Senator Inn & Spa in Augusta, said he’s been a vocal opponent of the meals-and-lodging tax increase. He said when tourists come to Maine, more of their disposable income will be eaten up by the increased taxes, leaving them less to spend elsewhere.

“It’s a quick and easy grab to tax the tourists again,” he said.

While the compromise proposed by lawmakers includes the sunset provision, Bintliff is skeptical that the tax actually will be lowered in two years.

“There is no sunset on revenue,” he said. “They know that. No state has ever rolled back a meals-and-lodging tax.”

Susan Cover — 621-5643
scover@mainetoday.com