November 23, 2024
Editorial

MAINE PAY-GO 105

What should worry legislators even more than the news this week that state revenues will be lower than expected is that these shortfalls are happening in relatively good times. The fragile condition of the state budget demands a new response from lawmakers and new responsibility when they propose additional spending.

Federal government not long ago lived under a pay-as-you-go, or pay-go, form of budgeting, in which every new dollar of spending or new tax cut was offset by savings or additional revenue elsewhere. Maine, which already has a balanced-budget requirement, should adopt a form of pay-go for new programs.

But because chronic revenue shortages demonstrate that even the current level of spending may not be sustainable, lawmakers should consider a requirement that would cut more than just the spending equivalent when proposing new programs, say, 105 percent of it. Like the state’s old 90 percent bonding rule -in which new bonds could equal only 90 percent of the bonded debt being retired – the additional spending offset could slowly bring down the state’s overall spending. And like the 90-percent rule, it should not be permanent.

Pay-go 105 would recognize that new programs are often needed, but it would demand that legislators set priorities: Is a new program more important than an existing program? If so, identify it; if not, don’t spend on the new one.

Given the state’s tax burden, legislators have tough choices to make about what goes into the budget. Setting the bar for new spending slightly higher demands that legislators truly value what they are adding before they approve it. The proposed offset would be included in the language of all spending bills and so would have to be approved by lawmakers before the new program went into effect.

More immediately, the governor’s budget for the upcoming two years included several areas of cost savings and revenue increases – such as a $1 increase in the cigarette tax, school administrative consolidation resulting in 26 districts and managed care for Medicaid services in Maine – that lawmakers are likely to substantially revise or discard altogether. This leaves large holes in the budget that lawmakers must be prepared to close. Given the opposition to tax increases and other mechanisms to raise revenue, substantial cuts are going to be necessary. That is the short-term crisis, and legislators from both parties have been acting responsibly as they have looked for cuts.

They will return to education and health care because those two areas account for most of the budget. But no committee or blue-ribbon panel has the time to go through each of the thousands of spending items in the budget, compare them with all the other items and make a judgment about what should stay or go.

Starting with its passage, Pay-go 105 would give them a tool to do this, a way to account for the many good ideas that get proposed every year but that also add to the overall tax burden. It would slowly move Maine out of the budget jam it’s in now and force lawmakers to find programs that have outlived their usefulness.


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