AUGUSTA — Just hours after the House of Representatives overwhelmingly supported a bill that would have allowed local municipalities to vote on increasing sales taxes, the state Senate soundly defeated the measure.

LD 427, “An Act to Authorize Options for Local Revenue Enhancement,” authored by Rep. Sharri MacDonald, R-Old Orchard Beach, would have allowed towns and cities to hold local votes to decide whether they wanted to increase the state sales tax and keep the revenue from the increase.

The bill passed the House on a bipartisan vote of 101-48 but failed in the Senate, with 31 voting for the “ought-not-to-pass” motion and only four voting in favor of the bill.

Sen. Linda Valentino, D-Saco, said she supported the bill because tourist towns such as MacDonald’s hometown of Old Orchard Beach regularly collect large amounts of sales tax and often only receive a small portion of that through the state’s revenue-sharing program. Last year, Old Orchard Beach collected $75 million in sales tax but saw only $816,000 in revenue-sharing from the state, Valentino said.

“That certainly is not fair,” she said.

The amount Old Orchard Beach would get back this year would be even less under the Legislature’s budget, which reduces revenue-sharing to cities and towns by about 35 percent.

The bill also included sunset provisions that would have allowed the state to see how many towns would enact local options in a short period.

Opponents argued that towns such as Freeport, with huge retail businesses or a mail-order giant like L.L. Bean, would have been able to gain giant windfalls on fairly small sales tax increases while others with little sales activity would be left short.

Valentino said the bill probably should have been amended to be applied only to meals and lodging and was intended to be applied to mail-order sales.

“This was to help small communities that can grow to 10, even 50, times their size in the summer and help them out,” she said. “It was just a tool in the toolbox.”

Other senators saw it differently.

Sen. Doug Thomas, R-Ripley, said it would unfairly hit rural communities that have to shop or make large purchases such as farm equipment in service-center communities, where those bigger retail operations are based.

“It is a tool,” Thomas said, “a tool to separate the people of Maine from their money.”

sthistle@sunjournal.com