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Maine Covering the Uninsured Funding, Question 1 (2008)

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The Maine Covering the Uninsured Funding People's Veto, also known as Question 1, was on the November 4, 2008 ballot in Maine as a veto referendum, where it was approved. The measure repealed three aspects of recent legislation changing the funding for the Dirigo Health Program. These aspects were a health access surcharge on paid insurance claims at a fixed rate of 1.8 percent, an increase in the existing tax on malt beverages and wine and a new tax of $4 per gallon of syrup used to make soft drinks and 42 cents per gallon of bottled soft drink.[1][2]

Election results

Maine Question 1 (2008)
ResultVotesPercentage
Approveda Yes 462,818 64.65%
No253,02635.35%

Election results via: Maine Secretary of State, Elections Division, Referendum Election Tabulations, November 4, 2008

Text of measure

The language appeared on the ballot as:[1]

ME2008Nov Question 1 SB.PNG

[3]

Summary

The following description of the intent and content of this ballot measure was provided in the Maine Citizen's Guide to the Referendum Election:

This referendum asks whether Maine voters want to approve or disapprove those portions of newly enacted legislation that change the method of funding the Dirigo Health Program, established by the Legislature in 2005.

The Dirigo Health Program is currently funded through a charge of up to 4% on claims paid by private health insurance carriers, employee benefit excess insurance carriers and third party administrators, known as the “savings offset payment”. The amount of the savings offset payment is based on a determination, made annually by the Board of Directors of the Dirigo Health Agency and subject to approval of the Superintendent of Insurance, of aggregate measurable cost savings to the health care system as a result of the operation of Dirigo Health. These savings include, but are not limited to, reductions in the amount of bad debt and cost of charity care provided by Maine hospitals to people who were formerly uninsured or underinsured.

Legislation enacted in June (Public Laws of 2007, Chapter 629) amended the Dirigo Health Program statute to replace the savings offset payment with funding from three different revenue sources:

  • Part D establishes a health access surcharge on paid insurance claims at a fixed rate of 1.8%;
  • Part E increases the existing excise tax from 25 cents per gallon to 54 cents per gallon on malt beverages sold in Maine from producers who manufacture more than 100,000 barrels of malt beverages per year, and increases the excise tax from 30 cents per gallon to 65 cents per gallon on wine manufactured or distributed in Maine from producers who make more than 20,000 gallons each year; and
  • Part F imposes a new tax of $4 per gallon of syrup used to make soft drinks and 42 cents per gallon of bottled soft drinks sold or offered for sale in Maine. The legislation exempts from this new tax the powder or base product used to produce coffee or tea; juice or vegetable concentrates that contain more than 10% natural fruit or vegetable juice; unflavored non-carbonated water; and any product containing milk or milk products.

After the legislation including the above-described changes was passed by the Legislature and signed by the Governor in June 2008, petitioners collected a sufficient number of signatures of registered voters to refer Parts D, E and F to the people for approval or disapproval at a statewide election. The effect of these parts of the legislation has been suspended pending the outcome of the election.

A “YES” vote is in favor of the people’s veto and disapproves Parts D, E and F of the legislation that would change the method of funding the Dirigo Health Program.

A “NO” vote is in opposition to the people’s veto and approves Parts D, E and F of the legislation that would change the method of funding the Dirigo Health Program. [3]

Office of the Attorney General, [1]

Fiscal note

The following fiscal impact statement was provided in the Maine Citizen's Guide to the Referendum Election:

Assuming successful passage of the people's veto of Parts D, E and F of Public Law 629 “An Act To Continue Maine’s Leadership in Covering the Uninsured”, the following anticipated revenue impacts from implementing Parts D, E and F on January 1, 2009 will no longer occur:

ME2008Nov Question 1 Fiscal Impact Statement.PNG

[3]

—Office of Fiscal and Program Review, [1]

Support

Supporters

Maine1.gif

The referendum was sponsored by Fed Up With Taxes.

Other supporters included:[4]

  • Maine Beer and Wine Wholesalers
  • Maine Beverage Association
  • Maine Restaurant Association
  • Maine Auto Dealers Association Insurance Trust
  • Former legislator Tom Sawyer

Arguments

Notable arguments made in support of the repeal:[5][6]

  • Maine residents already pay enough in taxes. Maine has the fourth highest tax burden among the 50 states. This is the first opportunity Maines have to reject a tax increase in over two decades.
  • Repealing these taxes will allow Maine residents to keep more of their own money during tough economic times. Unless turned down by voters, these taxes are estimated to cost $40 million in higher taxes each year.
  • If Amendment 1 does not pass, jobs in the beverage industry could be lost. A study done by Todd Gabe, Associate Professor of Economics at the University of Maine, found that the higher taxes would lead to the loss of 395 full- and part-time jobs in the beverage industry due to lower sales. This would mean Mainers would lose out on $8.8 million in wages and salaries.
  • Passage of the People’s Veto does not eliminate funding for the Dirigo Health Program. No one covered by the Dirigo Health Program will lose their health insurance coverage as a result of the People’s Veto. This fact was acknowledged by the Executive Director of the Dirigo Health Agency at its Board of Trustees meeting on May 20, 2008.

Report on Economic Impact

Dr. Todd Gabe, an economist at the University of Maine, has published a report on the expected impact of the new beverage taxes. If voters did not approve Question 1 to repeal Public Law 629, Gabe estimated the tax will cost up to $40.7 million more per year in raised taxes on beer, wine and nonalcoholic beverages. Furthermore, sellers of these products would have seen net sales revenues for beer, wine and soft drinks would fall by $17.5 million. The study noted that nearly 400 jobs, representing about $8.8 million in income, could have been lost as a result of the tax.[6]

Opposition

Opposition

Opponents included:

Arguments

Notable arguments made in opposition to the repeal included:[7]

  • The Dirigo taxes the beverage industry, not consumers.
  • The repeal would deny health insurance coverage to 18,000 families.

Path to the ballot

See also: List of People's Veto ballot measures in Maine

The law that was vetoed by the people was originally enacted as Parts D, E and F of Chapter 629 of the Public Laws of 2007 on April 16, 2008. In June 2008, a sufficient number of signatures were submitted to refer those parts to a veto referendum, which also suspended those parts of the legislation pending voter approval.[1]

See also

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