Shrink services, save tax cuts

As we grapple with the budget in Augusta, I can come to only one conclusion: The real name of the problem is not “structural gap”; the real name of the problem is “fiscal irresponsibility.” Since November, the media has been full of stories about a structural gap in state government. What that means is that the anticipated revenues do not match spending.

The governmentalists and big spenders make it sound like a crisis. Why not roll back recent tax cuts to produce more revenue, they say.

They start with the assumption that all government spending programs should be funded without questioning whether cuts are in order.

I, for one, cannot accept this strategy. I will not burden the already over-burdened Maine family with tax increases. On Feb. 22, I wrote the Joint Standing Committee on Appropriations and Financial Affairs, “I am concerned the budget discussions have turned to balancing the budget at these, or even expanded, revenue levels.”

Maine is a small state, whose economic engine is delicately balanced on the tracks of a service economy. Maine’s revenue levels are increasingly volatile and sensitive to even minor changes in general economic activity. Maine must determine a sustainable level of revenues and then build a base level of government expenditures that can be funded by annual revenues with some degree of continuity and certainty. To do otherwise will inevitably result in boom-and-bust cycles, as evidenced by the excesses of fiscal years 2000-01 and then the expected deficits of FY 2002.

Maine has not budgeted with fiscal restraint. In fact, it has created a base level of government expenditures that far exceeds the sustainable revenue level. To make matters worse, state government has fed its insatiable appetite for growth on the backs of Maine’s working families because by some calculations Maine is the number one tax-burdened state in the nation.

How much more can we burden Maine working families? Now is the time for this Legislature to come clean and confess to Maine people that every new program has a cost. These new expenditures will have to be met by new taxes. As an elected official, I understand the political difficulty of resisting expansions of state programs. But, as we have witnessed, failing to do so is financial folly.

In order to downsize state government, we should look at bureaucracies that are top-heavy with managers and the out-of-control costs of Medicaid, other DHS programs and education costs. Few would question the value of any one of these programs but the simple truth is that we, as a state government, are living beyond our means and must make adjustments. Recently, the governmentalists have suggested raiding the “Rainy Day Fund” and reamortizing unfunded pension liabilities to cover their new spending.

Certainly those are tools to be used to manage the state’s finances. But they should not be used to fund new spending or cover existing expenditures in the beginning moments of an economic downturn. These tools represent financial insurance and once they are used, they are gone forever.

I do not have all the figures. The Appropriations Committee does. But I believe guidelines for it to follow should include:

. No new taxes. We can’t continue to overburden working families.

. Cut current state budgets across-the-board by 6 percent. If it means freezing hiring non-essential managerial personnel, so be it.

. No new state programs unless the money comes from reallocation out of an existing account so that we have a net zero impact on the bottom line.

. A 10 percent cut in the Legislative Account. We should lead the way. If it means fewer people take out-of-state trips, so be it.

. Reform Medicaid. Require prior authorization for expensive procedures and stopping the growth in expensive non-medical coverage.

. If these recommendations are adopted and there is a revenue shortfall, then – and only then – could money be taken out of the Rainy Day Fund.

Since we climbed out of the last recession, the past decade has been an unprecedented period of growth. It appears now, however, that we are entering a period of low or no growth. Now, more than ever, the notion of sustainable levels of revenues is critical to the budget setting process. I call on my fellow legislators to act with fiscal responsibility to fix a problem that will only get worse without our intervention.

Richard A. Crabtree is a freshman representing House District 60, which includes Appleton, Hope, Union, Warren and Washington.