Gov. Paul LePage hit many of the right themes Thursday in outlining his budget for the next two years to lawmakers. Government — at all levels in Maine — needs to shrink. Income taxes should be lowered. The state’s pension liability is a real problem that must be addressed now. More education dollars need to go to the classroom, not administration.
How all this will happen will depend on the details of the spending plan, which were not revealed Thursday. The governor quickly left town Thursday, leaving explanation of the budget to his commissioners.
For example, the governor stressed that his budget was about “shared sacrifice,” but the sacrifices he described would be borne only by state workers and retirees and the poor. This should strike most Mainers as inherently unfair. So, too, should the omission of children from the list of groups that he will protect as he reforms welfare.
The governor will be hailed — as he should be — for his proposal to lower the state’s top income tax rate and to make a large dent in the state’s unfunded pension liability. What Gov. LePage failed to mention was that his job was made significantly easier by a brightening financial picture. Nowhere in his speech to a joint session of the Legislature did he mention that state revenues are projected to be about $365 million higher than initially thought.
This shrank the gap between expected state spending and revenues and made it possible for the governor to include more than $200 million in tax reductions in his budget for 2012-13.
Instead, he described the state as “flirt[ing] with insolvency.” Not exactly the kind of message that will inspire businesses to invest in Maine. Nor is it accurate. In describing the state in such dire terms, the assumption is made that Maine could be made to pay all its outstanding obligations at one time. This won’t happen, just like a homeowner isn’t expected to pay off his entire mortgage in year five. Most homeowners would be flirting with insolvency if their entire mortgage debt were counted against their earnings for two years.
Details on how state government would be made smaller were scant, except for the mention of a hiring freeze and incentives to encourage state workers to retire.
There would be no state bonds or borrowing for two years in the governor’s proposal. The state allocation to higher education would not be cut, and K-12 schools will get a bit more money than was budgeted for the previous biennium.
Reducing the state’s pension liability would be done by raising the retirement age for state workers and eliminating cost of living increases in the short term and reducing them in the long term.
He also pledged tighter restrictions on welfare, such as a five-year limit to receive benefits and mandatory drug tests for welfare recipients previously convicted of drug offenses.
His final message was that Mainers who want to get ahead should “get a job.” He and the Legislature will have quite a job as they consider and debate the details of the governor’s two-year spending plan.