You would think that, after Gov. Paul LePage secured a re-election win over the Democrats’ best candidate, Bruce Poliquin was elected to Congress, and Republicans regained control of the Maine Senate, legislators in Augusta would hear the message loud and clear from the voters of Maine: that our state has a spending problem, not a revenue problem. This conclusion isn’t just a convenient political soundbite, ready-made for radio ads and political flyers; it’s borne out by the facts.
Between 2000 — toward the end of the King Administration — and 2014, General Fund spending increased by 35.9 percent, from $2.3 billion to $3.1 billion. If you add up the General Fund, Highway Fund, and federal funds, spending increased in Maine every year from 2000-2010, then it went down for three years in a row. Then, in 2014, it ticked up again, by 3 percent, for the first time since John Baldacci left office — after the Democrats regained control control of the Legislature in 2012.
That’s no coincidence.
Given that unfortunate history, it is perhaps not surprising that, in order to get any sort of income tax reduction done this session at all, LePage felt that he had to do so through a tax shift plan instead of mere cuts. After all, as soon as they regained a say in the budget process, Democrats made it clear that they weren’t interested in continuing any kind of spending restraint. This, of course, put LePage in a difficult spot: He couldn’t cut as much as he liked, and yet he must have known that Republicans in the Legislature would be resistant to any kind of tax shift.
Indeed, Republicans are right to oppose these kind of shifts. When the party had the majority in the 125th Legislature, they were able to pass the largest tax cut in state history with spending cuts. So, if they were to come up with a plan of their own to rival LePage’s, it should finance an income tax cut with spending reductions rather than a sales tax expansion. After all, that would offer a more conservative alternative to LePage’s plan and, perhaps, move both parties to some compromise version of the governor’s initial offer.
Instead, while legislative Republicans eliminated the tax shift, they didn’t replace it with bigger budget cuts. They proposed scaling back LePage’s income tax cut, maintaining the current sales tax rate (5.5 percent), increasing the meals and lodging taxes (LePage, wisely, wanted to reduce the meals tax), and maintaining homestead exemptions as they are. Rather than completely eliminating revenue sharing, as the governor proposed, they increased funding for it, and they rejected his proposal to tax nonprofits’ property.
Now, there are parts of legislative Republicans’ plan that are superior to LePage’s, to be sure. They are correct to not only reject the sales tax expansion, but also to dump the idea of taxing nonprofits. Still, rather than simply leaving revenue sharing in place as is, they should have offered a concrete plan to incentivize cost reduction in local government — something for which LePage has advocated.
Hopefully, rather than discarding LePage’s plan entirely in favor of their own flawed ideas, Democrats and Republicans alike work together in the coming days to create a workable plan that LePage will sign. Ideally, such a plan would include more spending cuts and fewer tax increases, but it’s realistic to expect some compromise with a divided Legislature. What’s not realistic is for either party to completely reject the idea of reducing spending out of hand. Not only should future revenue be reduced, spending should be cut in this budget as well. Maine taxpayers deserve the best of all three plans, rather than the most politically convenient parts.
That should be something we can all agree on.