BRING YOUR CREDIT CARD

Let’s go shopping. It’s all right – this one’s on the state, which is soon to receive $115.6 million from the federal government, thanks to the persistence of Maine’s Sens. Susan Collins and Olympia Snowe, who demanded that $20 billion in fiscal relief for the states be included in the recent tax cut package. One warning on the shopping spree: Like the closing comment fast-talking announcers add to certain commercials, some restrictions may apply.

Restrictions may not be exactly the right word, but Congress did not hand out money for just any state whim; the cash is supposed to be spent certain ways. More than half of it, in fact, must go to protecting Medicaid programs. For Maine and other small states, that still leaves $50 million for shopping and, already, some interesting, if not exactly original, spending ideas have been proposed. Legislative Democrats hope to browse in the expanded-programs aisle; Republicans want to check out the latest tax cuts. That stick-in-the-mud, Gov. John Baldacci, wants to save the money in anticipation of a structural gap in 2006. All wrong.

More restrictions: The $50 million must be used to “provide essential government services” and “cover the costs to the state of complying with any federal intergovernmental mandate.” The section of the bill covering this portion of the money is titled Temporary State Fiscal Relief; “Temporary” is the first word on purpose. That means wherever Maine decides to spend these funds, it should remember that the gift from the federal government is not going to be a regular event, but a one-time boost for states in a difficult period. The Medicaid funding gives states time to prepare for a time when the funding is no longer available and, like the remainder of the fund, to serve as economic stimulus. But no new ongoing programs; no permanent tax cuts.

And something else: Should Maine’s tax system conform with the federal tax package, it will lose some of its revenues. Lifting the marriage penalty is expected to cost the state more than $30 million in the next two fiscal years, and the write-off on investment for small businesses another $6 million. That leaves $14 million over the biennium, no longer much of a windfall but still substantial.

One last caveat: The federal education reform, No Child Left Behind, was supposed to be funded at $32 billion, but received only $22.8 billion from Congress. It isn’t yet clear how much this discrepancy will hurt Maine, but a guess based on population would suggest that Maine should have as much as $40 million on hand to cover the added expense of these new standards. That leaves the state with a balance from the federal windfall of $-26 million. Not so good. Fortunately, being $26 million short is nothing new to Maine; happens all the time these days, and is no reason to cancel the trip to the mall.

Ready to shop?