Putting the ‘eternal life’ of government spending to rest

The nearest thing to eternal life we will ever see on earth is a government program.” Ronald Reagan made that famous statement and it is hard to argue with. Government programs die hard.

Maine’s multitude of government programs are no exception, especially our economic development programs. We’re loaded with them. We spend hundreds of millions of taxpayer dollars on them and many have been around a long time.

The problem with these programs, according to a recent report from the Legislature’s OPEGA – Office of Program Evaluation and Government Accountability – is that we simply lose track of them. We lose track of their goals and objectives, if indeed they had any clear ones to begin with, and we lose track of administrative costs, which often are excluded from any reporting on the program. These programs can become autonomous, taking on a life of their own and requiring an ever-increasing administrative staff and budget, morphing and changing with the economic climate.

With goals or objectives so ambiguous, with no clearly stated public purpose and with little or no required reporting on their performance, it is difficult to determine how efficient some programs are. After a while, we lose sight of whether the programs are necessary or whether, in some cases, a completely different (and cheaper) program would do a better job.

It was often assumed that a particular tax break, government loan or grant would most assuredly help businesses and would also bring in federal dollars. With “free” federal funds in the mix, measuring achievement of the program becomes somewhat irrelevant. As a result, reporting from the different agencies and from the business beneficiaries varies from program to program, making comparisons difficult if not impossible. Without strict reporting guidelines, we don’t know where benefits become redundant or overlap and what impact each one has individually on the economy of a region or the state.

Our inability to monitor, evaluate, measure and control these programs allows them to continue to grow and spread, requiring more resources rather than fulfilling their original purpose and dissolving.

Into this disorganized and inefficient environment comes the next round of economic-research and development programs. Already in this new Legislature, more than $300 million worth have been proposed. To pay for these new programs, and to pay the interest costs on the borrowed money, there is a good chance taxes will be raised.

Considering the phenomenal sums of taxpayer money already being spent on economic development programs, Maine should be, by now, “economically developed.” But our economy is faltering and is considered by the Federal Reserve Bank of Boston to be one of the worst in the country.

In a mood of wild optimism, we are told that this time it will be different. These new taxes for these new programs are going to make the difference. Just one more tax and Maine will emerge as an economic powerhouse.

Perhaps. But at least part of Maine’s economic problem could be that some of these tired and redundant programs have long outlived their usefulness and are more of a drag on our economy than a boost.

The OPEGA report has suggested several solutions to correct this situation, which could save our state millions of dollars. Among the most obvious and straightforward suggestions are ideas that should have been implemented long ago.

OPEGA suggests that we review all existing economic development programs for efficiency and redundancy. All of these programs should be put into a single “investment portfolio,” overseen by one department instead of scattered throughout our vast bureaucracy. Hold someone accountable. When everyone is accountable, no one is. This would allow anyone – new businesses, new legislators, unemployed workers – to quickly see what programs are offered and where they can be found.

We need strict standards for planning, providing and reviewing economic development assistance. Every program needs a clearly defined public purpose and we need strict reporting standards with data specific towards that program’s goals.

There is no question that Maine’s economy needs help and economic development programs can be a part of that help. But to breathe the most life into our failing economy, national economists unanimously agree that we must reduce our tax burden. Companies won’t invest here when our tax burden is the worst in the country.

Many other states already understand this. In New Mexico, Democratic Gov. Bill Richardson cut the top income tax rate by more than 30 percent. “Businesses move to states where taxes are falling, not rising,” he observed. As the cuts kicked in and economic activity accelerated, tax revenues surged by 27 percent. Meanwhile, the state has amassed a $500 million surplus.

Cutting Maine’s taxes could be the best economic development program of all.

Jonathan McKane of Newcastle is the state representative for House District 51.