A Bad Deal for Maine

June 29, 2015 Posted by Patrick Marvin - No Comments

On Monday, Gov. LePage is expected to veto the legislature’s $6.7 biennial state budget, and force lawmakers to either over-ride his veto or head back to the budget negotiating table.

And while significant attention will be given (by Democrats and members of the media) to the fact that LePage’s veto means Maine could be heading towards a government shutdown, it’s important to remember that the budget deal LePage is vetoing is simply a bad deal for Maine.

The deal is riddled with flaws and shortcomings, and would fail to move Maine towards prosperity or economic growth. It does not adequately address the largest issues facing Maine, nor does it reflect the core ideas and principles that Republicans were overwhelming elected on last November.

The most egregious issues within the budget, and the most obvious reasons this is a bad deal for Maine are that:

The budget deal is actually a tax increase

An initial analysis by the Maine Revenue Services (MRS) concluded that the budget deal would cut taxes overall by approximately $135 million.

However, as found by Al Dimillo, the MRS appears to have made several significant omissions and miscalculations in their analysis. Dimillo asserts that the deal is actually a substantial tax increase, and would in-fact raise taxes by about $18 million between now and December 31, 2017.

But even if MRS was correct in their calculations, legislators and taxpayers should not feel any more excited about the deal. MRS themselves even found that a nearly 188,000 or 17% of Maine households would see a tax increase under the plan.

The majority of these households – about 74,134 of them – earn between approximately $26,000 and $92,000 and are middle-class Mainers who are already struggling to get by.

And although the budget plan would greatly increase the size of the standard deduction, it also phases-out itemized and standard deductions starting at $70,000 for a single taxpayer. The largest itemized deductions for taxpayers are charitable contributions, mortgage interest deductions, and medical expense deductions, meaning those who donate to charity, buy a home, or have medical expenses could take a significant tax hit.

Increasing taxes on these individuals, or any individual in Maine, is not only counterproductive and detrimental to economic growth, but it is unnecessary and unneeded. Maine is raising record amounts of revenue, and is spending higher amounts than ever before. A tax increase is not needed, and should not even be an option that is on the table at this point in our budget process.

The deal increases spending by a breathtaking $300 million

Republicans were elected this past November on promises of limited government, lower taxes, and lower levels of government spending.

Unfortunately, that message seems to have gotten lost in the budget negotiations, as the budget deal would increase state spending by a mind-boggling $300 million over the previous biennium.

An obvious issue with increasing spending (especially by this amount) is that it comes in conjunction with Maine attempting to cut taxes. It makes absolutely no sense, and violates basic economic reasoning for Maine to increase the amount of money it is required to spend, and simultaneously decrease taxes and the amount of money it is able to spend. Any tax reform (no matter how big or small) will undoubtedly fail if it is not accompanied by substantial spending cuts.

If Maine legislators are serious about lowering the tax burden, and providing relief to hardworking Mainers, it is critical that they go back to the table, and seriously consider slimming down the size of Maine’s government.

Legislative leaders wrote this deal in secrecy, behind closed doors

Throughout the budget process, Maine citizens are given the right to observe, analyze, and scrutinize the legislators and the work involved in crafting the budget.

Unfortunately, that right was abandoned in the final stages of the budget negotiations, and legislative leaders crafted the budget almost entirely on their own.

The public (and the rest of the legislature) was denied the right to observe the negotiations, and as a result, Maine now has a $6.7 budget deal that was created in secrecy with no oversight.

This is not how our government should operate.

Maine citizens and lawmakers deserve a transparent budget process, and a budget that reflects their views, beliefs, considerations, and criticisms. The budget should be analyzed and approved by experts and members of both parties, and so that the full effect of the budget can be discussed openly and candidly.

The budget makes almost no substantive welfare reform

Another campaign promise for Republicans – and a major reason they were elected – was to continue to reform and improve Maine’s welfare system.

But this budget makes almost no progress at correcting and refining Maine’s welfare program, and fails to institute many common-sense changes that would help move Mainers from poverty to prosperity. It increases payouts for General Assistance, makes staying on TANF much easier, and actually devotes more money to the TANF and SNAP programs.

And even worse, welfare reform has actually taken a step backwards in recent weeks, as Democrats this session have killed numerous welfare reform bills, including bills that would prevent the use of TANF funds for alcohol, tobacco, and gambling, and require drug testing for TANF recipients.

Democrats even passed (with the help of many Republican legislators) a bill that would extend General Assistance benefits to asylum-seeking immigrants for as long as two years.

This budget deal, and the recent activities of legislators, clearly do not represent the overwhelming message that voters sent this past November. The deal essentially preserves the status quo, increases spending, and squashes all hopes of reform and change.

The deal is a major disappointment for all those hoping for a transformative budget, and it is a continuation of the liberal policies that have caused Maine to suffer from economic stagnation.

Quite simply, it is a bad deal for Maine, and it is not the deal that the people of Maine need or deserve.