Maine’s coffers are not losing anything

The Associated Press story published in the Bangor Daily News on Feb. 3, titled, “Study: Maine’s coffers lose $2.2B a year to tax breaks,” is a journalistic disappointment, biased against fiscal responsibility and woefully deficient.

The article is not a study, it is an inventory of Democratic and liberal ways to increase taxes. It is not an independent, professional analysis of so-called tax breaks and their significance regarding a budget shortfall.

Maine coffers are not losing anything. This title gives the impression that Maine taxpayers are illegally evading tax responsibilities. This suggestion is false and irresponsible. The “shortfall” was not caused by “tax breaks.”

Removing these tax “breaks” would increase the budget and tax burden on Maine citizens by $2.2 billion. Is that what the BDN and AP reporter Glenn Adams are suggesting? Gov. Baldacci opposes increasing the tax burden. Whatever proposals the Joint Tax Committee adopts, if any, must be revenue neutral and offset every dollar of tax increase with a dollar of tax decrease. Otherwise, the tax burden in the highest-taxed state in the country will go up even more.

The 2003 budget can be balanced right now, without cutting actual spending even one dollar below last year. The shortfall is purely the result of overestimation of revenues during an economic slowdown and recession. “Planned spending” in the shortfall can and should be cut $2.2 billion. Revenues during the first six months of 2003 increased 4.1 percent above last year. If this track continues, the Legislature will have $96 million more in the General Fund at the end of June than they had last year.

Gov. Baldacci should honor his promise to keep spending growth in line with inflation. Since inflation last year was 1.6 percent, spending in 2003 should not rise more than 1.6 percent. The rest of the increase should be devoted to stimulating job and income growth by cutting business taxes and reducing the tax burden.

Glenn Adams, the BDN and the rest of the press do a great deal of social harm by fostering the impression that spending will decrease if the shortfall is not funded and by implying that the Legislature should increase taxes to fund the shortfall.

Hadley E. Smith is a retired Ph.D. economist from Palmyra.