Once again, the governor and Legislature face an enormous budget crisis – a crisis that is about to get worse as we begin to tackle the budget for next year. The most recent budget, which Republicans did not support, cut funding for the university system and the community colleges, “borrowed” money from the retired teachers’ health insurance, and instituted a “sick tax” of about $16 million. Meanwhile, an expansion of Medicaid was left intact, which will put another 78,000 more Mainers on the state’s health care plan come July. That is a 32 percent increase in Medicaid patients – more spending for Medicaid means more cuts for our universities and colleges.
This has all happened before. In a four-year period, from 1986-1989, spending increased by almost 50 percent. That was followed by a severe recession and an equally severe budget crisis. In 1997-2000 spending again rose at a record pace with a 40 percent increase, followed by – you guessed it – another serious budget crisis.
Does Maine have to continue with the boom-and-bust mentality of budgeting? The answer is a resounding no.
A majority of states now have some form of limitation on the growth in state spending. The issue was raised frequently during the recent gubernatorial campaign in Maine, with all of the candidates promising to limit spending in one form or another. With state spending in Maine running approximately twice the rate of inflation over the last decade, many have argued that the issue of more stringent controls on the spending side is long overdue. We couldn’t agree more.
The time is now for a constitutional amendment that limits the amount that state spending can grow each year. There are a number of ways to accomplish this including using the rate of inflation plus the percentage growth in the population. Over the past 10 years, that would have given Maine state government anywhere from a 2.5 percent to 3.5 percent increase each year. If state spending had been held to that standard over the past 10 years, Maine’s budget would be at least $500 million lower today than it currently is.
Which brings us to tax reform. You see, the key to responsible tax reform has little to do with the taxes and has everything to do with spending.
Maine will never see meaningful tax relief as along as we continue to increase spending faster than inflation. Once the spending limits are in place, the “excess revenues” – also known as your tax dollars – could be applied to lowering the income tax rates. Some of the revenues could be used to meet our obligation to funding local aid to education (which would dramatically improve Maine’s property tax burden). Most importantly, we would have a government Maine people can afford instead of constant budget messes.
Spending and budgets are about choices, real choices that affect Maine people. Does it make sense to promise Maine people better access to education, and then renege on that promise because of poor budget planning? Can we really afford a 30 percent increase in Medicaid enrollment for a program that is growing at rates far greater than inflation – and then cut back on local funding for schools? As long as spending decisions in this state are made without a real connection to the Maine economy, Maine families will continue to endure the boom-and-bust budget cycles, and bear the full brunt of Maine’s highest in the nation tax burden.
So, the next time you hear anyone from the Legislature talking about tax reform, remind him or her that it starts with spending reform.
Sen. Edward Youngblood, R-Brewer, is in his second Senate term, works for Bangor Savings Bank, and serves on the Agriculture, Conservation and Forestry Committee and the Utilities and Energy Committee. Rep. Anita Peavey-Haskell, R-Greenbush, is serving in her second term in the Maine House and is the ranking Republican member on the State and Local Government Committee.
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