AUGUSTA -- The Legislature passed a new tax package Thursday night that included changes sought by Gov. John Baldacci.

The Legislature had sent the original bill, LD 1088, to Baldacci last week. But the governor had problems with parts of the proposal, and his staff worked with Democratic legislative leaders to craft a new bill, LD 1495, that addressed some of his concerns.

As with the old bill, the House and Senate voted mainly along party lines. The House vote was 84 to 61, and the Senate was 20 to 13.

Both the old and new bills would lower the income tax from 8.5 percent to 6.5 percent. They would both increase the meals and lodging tax from 7 percent to 8.5 percent, and also broaden the sales tax to include a number of items and services that had previously been exempt.

But the new bill makes several changes:

* It would maintain sales tax exemptions for a number of activities that would have been taxed under LD 1088, including golf course fees, bowling fees, ski lift tickets, skating rink admission and others.

* A taxpayer's yearly income above $250,000 would be taxed at 6.85 percent.

* It would eliminate a proposed real estate transfer tax increase on home sales of $500,000 or more.

* It would increase the percentage of meals and lodging tax receipts spent on tourism marketing from 5 percent to 6 percent.

* It would include a refundable earned income tax credit to help lower- and middle-income families.

The goal of the changes was to make the tax package more progressive, and to help low- and middle-income families who would have paid more with the broader sales tax base, said David Farmer, Baldacci's deputy chief of staff.

Proponents maintain that even after paying more in sales taxes, the lower income tax rate would bring the overall tax burden down by an average of $167 a year for most Mainers. The tax changes, particularly meals and lodging taxes, would fall disproportionately on out-of-state visitors, backers say. Broadening the sales tax would stabilize Maine's revenue streams, they say.

Farmer said that under the new plan, 579,000 families would see their taxes go down, compared with 558,000 families under LD 1088.

"The compromise is more progressive, more families see a direct benefit and we provide greater support for our tourism industry without negatively affecting the fragile real estate market," said Baldacci in a written statement.

Rep. John Piotti, D-Unity, LD 1088's sponsor, said the new bill marks the first significant change to Maine's tax code since the 1960s."This is definitely a first step," said Piotti. "It's the hardest step, though."

Asked about the compromises in the new bill, Piotti said, "We like the bill we passed, but we do feel the governor has weighed in with suggestions we can live with."

LD 1495 was a governor's bill sponsored by Rep. Thomas Watson, D-Bath, co-chair of the Taxation Committee.

Republicans didn't support the first bill, and were unhappy with how quickly votes were taken on the substitute - as well as with some of the changes in the new legislation.

Some of those changes would benefit people in $600,000 homes who drive a Lexus and go skiing, said Rep. Joshua Tardy, R-Newport, House Republican leader. But the tax changes will hurt "Joe six-pack," who will have to downsize to "Joe five-pack," he said.

Tardy offered an amendment that would send the plan to voters in a referendum. The House voted to indefinitely postpone the amendment.

One of the services that will be subject to sales tax under both bills is the labor for vehicle repairs, something many complained about.

"I don't see any change for the gentleman who has to get his pick-up fixed," said Rep. James Campbell Sr., R-Newfield.

Sen. David Trahan, R-Waldoboro, said he was unhappy with the speed of the new bill. It was printed Thursday and voted on Thursday evening.

The governor is expected to sign the bill today.