Tax and spend

Maine is about to enjoy a $70 million tax windfall from the sales of the electricity-generating assets of Maine utilities. A proposal to dedicate that deregulation bonus to a trust fund for low-income ratepayers isn’t a bad idea, it’s just premature, unnecessary and, as a precedent, worrisome.

Maine already helps its low-income ratepayers, those with household incomes at 150 percent or less of federal poverty guidelines. The state spends $10 million to $12 million a year, with the money coming from a very small surcharge — less than one-half percent — on everyone else’s electric bill.

It’s a system that works: fair — the more power you use, the more you contribute; affordable — the household of modest means with a $100 light bill pays less than 50 cents extra; unquestioned — the Legislature has never even thought about scrapping it.

L.D. 1500 fixes something that already works by putting the $70 million into a trust fund, with income from the trust used for the electricity subsidies. The surcharge would continue for a couple of years while the income potential of the trust builds up, a smaller surcharge might still be needed after that should the income not be sufficient.

Electric rates are flat. With deregulation, they should go down. They’ll go down even more should the Department of Housing and Urban Development ever decide to quit playing games with ice storm disaster relief. The elimination of this extremely modest, broad-based surcharge would hardly be noticed.

That $70 million, though, is hardly modest. That’s a lot of money to be tying up forever for something that isn’t a funding problem as is. There are other needs, longstanding and long-neglected needs, that have funding problems, that have been waiting for money far longer. This is one-time cash in a state with a huge list of one-time needs. That $70 million, in fact, is remarkably close to amount needed to fix the roofs of Maine’s leaky public schools.

Without L.D. 1500, the corporate income taxes from the generator sales will go, as do all other income taxes, into the General Fund. Once there, it will be up to the Legislature and the governor to make spending decisions based upon priorities. With L.D. 1500, those decisions are already made. Dedicating a specific source of General Fund revenue to a specific purpose now and forever is a bad habit for lawmakers to get into. The funding for essential government programs cannot be based upon their ability to be self-sufficient.

If the current method of funding low-income electricity assistence were in trouble, L.D. 1500 would be needed. It’s not, so it isn’t. Not to say that a permanent trust fund for this program isn’t a nice idea; it just needs to get in line behind all the leaky roofs that were there first.