Sales tax fever

Gov. King has asked the state’s high court to decide the intent of a 1993 law that automatically rolls back the sales tax. His gubernatorial challengers are pounding him from both sides, arguing either that the law is clear and needs no judicial interpretation or that the state simply can’t afford to reduce its income.

It’s a dandy election-year squabble. Too bad it never got the chance to be a reasoned legislative debate.

When the Legislature convened in January with a bulging revenue surplus to toy with, the issue was not whether there should be a tax cut but what tax should be cut. Democrats and the governor eventually agreed the income and property taxes most needed fixing; many Republicans held out for the sales tax, reminding all that the lawmakers who bumped it from 5 to 6 cents in 1991 promised it would be trimmed back as soon as possible.

It turns out lawmakers of yore did more than promise; they put it in writing. A 1993 amendment to the sales-tax hike set up a mechanism by which the tax would be cut: If General Fund revenues in any fiscal year (July 1 to the following June 30) increase by 8 percent or more from the previous fiscal year, the sales tax will drop from 6 cents to 5 1/2 on the subsequent Oct. 1. Unless the legislature in that future year prevents it.

It now seems almost certain that the fiscal year ending in another week will pass that threshold. It also seems almost certain that the state is facing a revenue shortfall of $300 million or more in the coming two-year budget cycle. That gap must be closed; there are serious choices to make between increasing tax revenues and reducing spending. And given the dreadful way the Legislature has handled previous shortfalls — by cutting aid to education and thus driving up property taxes, by cutting social programs and then paying double through ruinous consent decrees, by allowing roads, bridges and everything else the state owns to crumble — it is entirely logical to question the prudence of forsaking $60 million in income that accrues by the half-penny.

But the time to have asked that question was this spring, when the Legislature was in session. No mention was made of the 1993 rollback provision, even though many current lawmakers were on the job when it was passed. No full and open debate was held on how the looming shortfall would be addressed. If legislators were reluctant then to doubt the wisdom of cutting sales tax revenue by $60 million, imagine how reluctant they’ll be to do so if called into a special session this fall, right before election day.

The issue the governor has asked the Maine Supreme Judicial Court to sort out is whether the 8 percent mark must be reached at the June 30 end of the fiscal year, which it probably will, or at a nearly year-end estimate made by the state budget office on May 15, which it did not. The three pertinent paragraphs in the law (MRSA 36-1764 Ch. 213 — look it up) could not be much clearer: The May 15 deadline refers to saving overcollected 6 percent sales taxes from the year almost ended; the half-cent rollback for the years to come is tied solely to the actual June 30 bottom line.

Trying to add confusion to a situation when it does not exist benefits no one. Neither does pretending not to notice an oncoming crisis Maine knows too well. Those who worry that the state cannot afford to reduce its sales tax now can only hope the Supreme Judicial Court has a definition of `subsequent’ different from that of the rest of the English-speaking world. Which actually is far more likely than having lawmakers who face problems head on.