Compromise Budget Contains $294 Million Spending Increase
According to the Office of Fiscal and Program Review, the budget deal backed by Senate Republicans and House Democrats would raise state spending by an astonishing $294 million over the next biennium.
A supposed “compromise” between Senate Republicans and House Democrats, the budget plan calls for $6,711,394,783 in state spending over the next biennium, which is an increase of roughly 4.58% over the current budget, and $130 million more than Governor LePage’s budget proposal.
$4 million of this new spending was reportedly tacked on during an around-the-clock budget negotiation late Friday night, and is comprised of numerous pet-projects and wasteful initiatives such as:
- $1 million in funding for a workforce development bill sponsored by Speaker Mark Eves (D-North Berwick).
- $1 million towards Federally Qualified Health Centers sponsored by Sen. Roger Katz (R-Augusta).
- $352,452 for an educational opportunity program sponsored by Senate Minority Leader Justin Alfond (D-Portland).
- $410,982 towards workforce development at Brunswick Landing sponsored by Sen. Stan Gerzofsky (D-Brunswick).
This willingness to accept higher spending is a sharp turnaround for Senate Republicans who have previously promised to reduce the size of government. Republicans campaigned tirelessly on themes of limited government and lower spending last election, and were even reportedly cool to Governor LePage’s recent budget proposal because it contained a spending increase.
In March, Senate Majority Leader Garret Mason explained that “Senate Republicans’ priorities this session are the same as those we campaigned on in 2014: ensuring Maine’s hardworking families are paying less in taxes and energy costs, and no longer seeing their hard-earned money being wasted by a bloated government.”
Mason also added that although the Governor’s budget would likely be changed by the Legislature’s budget committee, “Senate Republicans will be working to make sure those changes include a reduction in the cost and size of government, and an overall benefit to Maine’s hardworking families.”
The concessions of Maine Senate Republicans are also particularly surprising given the attention in recent weeks to cutting the income tax and reducing the tax burden on Maine citizens. Tax reform has been a major theme of this year’s legislative session for both parties, as even the Democrats put forth a budget proposal that contains income tax reductions.
The bi-partisan nature of the desire for tax reform has not only created a historic chance for tax reform, but has created an enormous expectation that Maine legislators will make a substantial effort to reduce the tax burden and provide relief to the people of Maine.
Reducing the income tax has been shown to encourage economic growth, and would be a much needed move to make Maine a more attractive location for businesses and working individuals.
But unfortunately, the compromise budget plan announced late last week squanders this valuable opportunity for reform and ignores the desire for reducing the tax burden.
And to make matters worse, while Senate Republican leadership seems to have compromised and given in to the many expensive demands of Democrats, it seems that Democrats were less willing to do the same. The only major “victories” for conservatives in the deal are a constitutional amendment that would require a future income tax increase to be approved with a 2/3 legislative majority, and preserving the status quo on sales tax.
However, the constitutional amendment would still need to be ratified through a vote by Maine citizens, and every previous income tax increase has been approve by a 2/3 majority, even without that requirement.
Other components of the compromise budget plan reportedly include:
- Lower funding levels than the ones proposed by Gov. LePage to stop the spread of illegal drugs in Maine.
- Funding for illegal immigrants in the TANF and SNAP programs.
- Funding for undocumented and illegal immigrants in the General Assistance program.
The other plan, promoted by House Republicans, attempts to tackle some of these problems. The House GOP compromise plan makes the following changes:
- Reduces the income tax rate for the $8,650-$25,340 bracket to 5%.
- Reduces the income tax rate for the $24,350 or higher bracket to 6.2%.
- Exempts military pensions from the income tax.
- Keeps the sales and use tax at 5.5%.
- Repeals the estate tax in tax year 2017.
- Maintains the Homestead Exemption as it is currently written.
- Instructs each government Department to conduct a review of vacant positions that can be eliminated.
Lawmakers are statutorily required to submit a budget proposal to Governor LePage on June 18, or else shut down the state government.
It seems obvious at this point that neither budget solution offered by the appropriations committee will become law. As early as Friday, talks had already begun around “the next step” beyond the two proposed plans.
As those talks evolve, it will be critical for conservatives in Augusta to hold the line against spending increases, ensure that there are substantial income tax savings, and make certain that some welfare reform initiatives are included.
Tax less. Spend less. Waste less. A simple message.
Without these critical features, no deal will be worth agreeing to.