Release: Maine Policy’s Budget Blueprint
FOR IMMEDIATE RELEASE
January 9, 2023
Contact: Jacob Posik
Director of Communications
Maine Policy’s Budget Blueprint Offers Options to Control Spending,
Restore Prosperity in Next State Budget
The analysis highlights troublesome departments where spending is out of control,
and provides ideal tax reforms to control state revenues and expenditures.
PORTLAND, Maine – Maine Policy Institute today released a new analysis, the Maine Policy Budget, a budget blueprint that builds a new foundation on which the state of Maine should craft its biennial budgets.
The report tracks spending growth over the last four years among 351 units of state government relative to spending growth in other states, establishing a new framework for lawmakers to target uncontrollable spending and right-size state government.
It uses economic modelling to benchmark levels of spending and taxation in similar states to establish three budget scenarios (ambitious, sensible, and cautious), all of which would modify the state’s tax regime and differ substantially from the state’s current approach to raising revenue and spending taxpayer funds.
- The ambitious budget scenario recommends the abolition of the state income tax, in addition to several other small and economically inefficient taxes. It estimates annual revenue growth of 4.3% ($375.8 million) through Fiscal Year 2027 and a $3.9 billion reduction in expenditures relative to the 2022-23 biennium baseline.
- The sensible scenario recommends adopting a flat 4.5% income tax and exempting all income earned up to $50,000 annually from the income tax. It would reduce state expenditures by approximately $3 billion in FY27.
- The cautious scenario recommends only the elimination of the small and economically inefficient taxes from the ambitious scenario, including taxes on blueberries, potatoes, and sin taxes, among others, reducing state revenues in FY27 by $1.4 billion.
“The time is right for major structural reform. Any of the budget options included in this report would chart a better course for Maine people – not only by taking less of their hard-earned money, but by shaping a government that intrudes less on their future prosperity,” said policy director Nick Murray.
According to the analysis, Maine is an outlier in the region as it relates to taxation of the middle class. Mainers who earn less than $100,000 annually pay the highest income tax rate in New England. Adopting the sensible budget scenario would eliminate income taxes on the first $50,000 earned annually for all Mainers and represent a substantial improvement.
In examining spending growth by department over the last two biennia, the blueprint finds that spending within the Department of Labor and the Department of Economic and Community Development is most ruinous for the state budget when compared to spending by similar departments in other peer states.
“Governor Mills has consistently chosen one-time gimmicks that grow government and spend more money while rejecting structural reforms that would make Maine’s economy more competitive. Amid persistent inflation, and with an uncertain economic future on the horizon, now is the time to choose a path that prioritizes Maine people over Maine state government,” said CEO Matthew Gagnon.
An Executive Summary of the report is available here.
The Maine Policy Budget blueprint is available here.
Maine Policy Institute is a nonprofit, nonpartisan organization that works to expand individual liberty and economic freedom in Maine. Learn more about our work at www.mainepolicy.org.