Romance yields to reason: a tax story

Like some Republicans and a new state policy group, I’ve fallen for the idea of a constitutional amendment to require a two-thirds legislative vote to override any state-spending cap. It’s not an especially alluring thing for which to lose one’s heart, but there it is. Standing between me and the object of my desire, unfortunately, is Gov. John Baldacci armed with unassailable logic, which is this: When it comes to taxes and spending, Maine is filled with hopeless romantics.

We’re always wishing things were different. We look longingly across the border at low-tax New Hampshire and swoon. We hear tales of restrained growth in other states and feel a shortness of breath. Tax spreadsheets read as flowery love notes and we believe every digit of them. We wish and we believe.

Then in the unlovely light of morning we find that all that wishing didn’t get us anywhere. We’re still stuck with a lopsided dependence on property taxes, a narrow sales tax, the steep incline on income taxes. Even worse, high taxes overall compared with our incomes have burdened us for the last 15 years and state government has been unable to do anything about it. Can this affair be saved?

The select committee on taxation yesterday was expected to complete its work with a plan that is modest given the range of Maine’s tax miseries but refreshingly ambitious given its recent history. It has done all the practical, pragmatic, detailed work we dreamers should have done years ago. The committee’s tax cut is not nearly comprehensive, but it is large and lasting and might actually pass. It looks as if it will contain much of what the governor offered through LD 1 – a four-year shift in school funding from property taxes to state taxes worth about $500 million over four years, with a directive to drop property taxes; spending caps for all levels of government; an increase in the circuit breaker program. Some ideas were added, such as pressure on towns to match the state Homestead exemption, and some were dropped, such as an idea for reverse mortgages. A remaining issue was to account for the state’s habit of increasing county jail costs.

The policy group advocating for that constitutional amendment is called, reasonably, the Coalition for Reasonable Tax Relief for Maine. Some of the state’s more reasonable people, such as David Flanagan, former CEO of Central Maine Power, and Ron Bancroft, longtime education advocate, created it to try to move Maine’s tax burden to the middle of the national rankings over the next decade, a goal, shared by the governor and others that is, well, you know, reasonable.

They argue persuasively that for the governor’s spending cap to withstand the majority party’s temptation to override it, the cap should be backed up with a requirement that demands at least two-thirds of the Legislature to approve spending beyond its rate of growth. To keep a majority from waiving that two-thirds’ rule in the future, the coalition wants it protected by a constitutional amendment. This is different from the other constitutional-spending cap being discussed, called the Taxpayer’s Bill of Rights, which would put the spending cap itself in the constitution.

The Reasonable group had a late start and was still hustling this week to get its idea introduced to the public. This was unfortunate because its proposal seems like the sort of legislation Augusta needs, for at least the next decade, to stick with its tax-restraint pledge. The fact that it would prevent one party from deciding whether to raise spending limits would add credibility to the entire package. But the group was late, though it should have known the governor was going to move this bill along (he said he would last fall), which is where the governor’s caution comes in. He says Augusta isn’t accustomed to spending restraints and that it would be difficult to gauge what will happen under them, so Maine needs a couple of years of experience before going beyond statutory limits.

He also says the most important goal is to get something of substance, even a partial something of substance, passed. That is a sad truth. Even when Maine has approved tax reform in the past – just last June, in fact – some mysterious illness descends on the state and we forget we ever did. Gov. Baldacci’s unspoken message is that if his Democrats would gag on the constitutional restraint, then the restraint is out. (Do the politics of this need to be mentioned? Majority legislative Democrats, of course, want the fewest restraints on the actions of the majority; Minority Republicans want whatever restrains the Democrats.)

I think there still is room in the bill for the Reasonable amendment, but the administration’s point is fair enough. Maine does a poor job with tax policy; the small but measurable (and memorable) step about to be taken by the Legislature would be a success and reassuring evidence that more with taxes could be done later.

Smart policy groups or lawmakers who want more in the tax reform but know they don’t have the votes this round should find opportunity in this. Before next Friday’s tax vote, for instance, they might start spinning the work of the tax committee as Phase 1 of a session-long series of reforms on taxes. They might woo the governor with praise for doing what no one else has. They might find such a reasonable response speaks to the romantic in us all.

Todd Benoit is the editorial page editor of the Bangor Daily News.