REFORMING WELFARE
When attempting to address the largest cost drivers of Maine’s state budget, one must look at state spending on welfare programs. While legislators and Governor Mills are not facing a shortfall as deep as originally expected, it is prudent to review the largest programs in the budget in the shadow of the 2020 economic slump, as this is where the greatest savings are likely to be found. Below are various cost-saving options that Maine Policy believes would help right-size Maine state government and encourage greater overall labor force participation.
While many of these reforms touch on Maine’s welfare benefits system, it is important to prioritize the thousands of truly vulnerable people who are not able to support themselves without help from the state. These reforms will not affect those for whom these programs are vital, but rather those who are able to work. Combined with removing onerous regulatory barriers, Maine could incentivize business and job creation, opening doors for thousands who are currently trapped in a cycle of poverty and dependency.
As a percentage of total spending, Maine spends more on public assistance than 44 states, more than any in New England, and nearly double the national average of 1.2%. Maine spends more on the Temporary Assistance for Needy Families (TANF) program than 46 states, as much as California and New York, and more than double the national average of 0.7%.
During the LePage administration, the state set a 60-month lifetime limit on families accepting TANF. As a result, more than one-quarter of recipients left the program. A 2017 report from the Office of Policy and Management (OPM), which studied a cohort of 1,856 TANF recipients before and after the change, noted that the total wages of these individuals more than doubled from 2011 to 2012. Maine can still do more to build on this progress: limit this benefit for the truly needy and stem the tide of dependency that generous welfare programs can incentivize. Phasing down the lifetime TANF limit to 48 months could empower 10,000-20,000 individuals to leave the TANF program and pursue the dignity that comes with gaining personal financial stability. With $131 million total spent on TANF in 2019, this reform could save Maine’s General Fund up to $10 million over the biennium.
As of 2018, 16.8% of Maine residents received benefits from the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, the third-highest rate in the nation. Dubiously, Maine also has the second-highest food stamp error rate in the country at more than 19%; nearly one-in-five SNAP payments were made in error. Because of this high error rate, Maine taxpayers must reimburse the federal government about $3 million over the next biennium. There are likely many options to control costs, such as aligning Maine’s rates to national and regional averages. National and New England averages for SNAP participation are around 11%, with an error rate of about 7.7%. Legislators should call for an audit of the SNAP program to better understand why Maine’s SNAP program performs so poorly compared to the nation.
Empowering individuals to lift themselves and their families out of poverty should be a key goal of policymakers. Unfortunately, Governor Mills’ proposed budget does not set a goal to reduce the number of Mainers dependent on welfare benefits. Research shows a strong relationship between unemployment and depression, so any progress made toward a healthy economy and vibrant job market means ensuring a healthier future through sustainable prosperity.