AUGUSTA, Maine — Gov. Paul LePage delivered a straight-forward State of the State address on Tuesday that hit on many of his priorities — lowering energy costs, reducing welfare benefits and improving education.
Republicans in the Legislature praised the governor for his focus on improving Maine’s economic picture.
Even Democrats who worried that he might be strident and combative agreed that LePage struck the right tone and were pleased with his call for collaboration although they said they still want to see more details of some of the governor’s proposals.
To back his legislative agenda, the governor cited numerous statistics. While many were accurate, a fuller context often was missing.
Here’s a look at some of the claims LePage made:
He said Maine has the 12th highest energy costs in U.S., which is true. What he didn’t mention was that Maine has the lowest commercial and industrial electricity costs in New England and that this region doesn’t have an abundance of coal to help drive down costs. The governor did say that Maine must compete nationally, not just in New England, to attract and keep businesses.
He also compared the median household income of Maine with neighboring New Hampshire and Massachusetts. It’s true that New Hampshire and Massachusetts have higher incomes, but that is directly related to the Boston job market. Those who work in Boston simply make more money and two southern New Hampshire counties are part of the Boston metropolitan statistical area, a designation used by the U.S. Census Bureau.
It also costs more to live in the Boston area, something the governor didn’t mention. Massachusetts is tied with Rhode Island for ninth in the country in cost of living, according to CNBC.
LePage said unemployment is down in Maine and lower than the national average. Those claims are both true, but even since the economic crisis first hit, Maine’s unemployment rate always was below that national average.
And despite the reduced unemployment rate in 2011 — from 7.5 percent in December 2010 to 7 percent in December 2011 — approximately 7,000 Mainers still lost their jobs last year.
How is that possible? Unemployment rates are measured through a household survey, rather than by actually counting up the number of unemployed workers or by counting the number of people who are collecting unemployment insurance.
Adam Fisher, spokesman for Maine’s Department of Labor, said the number of nonfarm jobs has decreased by about 7,000 over the last year but he said that number is probably a high estimate. He also said that data are volatile and fluctuate significantly from month to month.
Fisher predicted that when the department compares those numbers with payroll data, the number of nonfarm jobs would be flat for 2011.
LePage said Maine had the 9th highest tax burden in the country as of 2009, pointing out that even “Tax-achusetts” had a lower rate. That is true, according to the Tax Foundation. One reason is that Maine has lower incomes than the national average, which drives up the tax burden calculation.
LePage then touted the tax cuts that were included in his $6.1 billion biennial budget package. Beginning in July, the top income tax rate will drop from 8.5 percent to 7.95 percent. The top income tax rate kicks in at about $20,000 per individual.
“Let me tell you this. No matter what anybody says, $20,000 is not rich,” the governor said.
Some Democrats have said the tax cut benefits the rich, even though many House and Senate Democrats signed onto the budget bill that included the cuts. The truth is that it benefits everybody who earns more than $20,000. The difference, of course, is that people who make $200,000 will see a bigger tax reduction than someone who makes $20,000.
According to Maine Revenue Services, a household that makes about $20,000 will see taxes drop by about $17 a year. For the top 1 percent of all Maine earners, the average savings would be about $2,800 a year.
LePage pledged in his State of the State to do more to lower income taxes in Maine in the coming year but didn’t divulge details.
David Clough, state director for the National Federation of Independent Business, said the governor’s agenda is good for small-business owners and he was especially encouraged by the governor’s push for more tax cuts.
“The governor was right to point out that Maine’s taxes are uncompetitive in the region and that it drives small businesses, retirees and other residents to other states,” said Clough. “Economic competition means a more competitive tax system.”
LePage said t he estimated $220 million budget shortfall in the Department of Health and Human Services was “fueled by overly generous welfare programs that we cannot afford.”
It’s true that increased enrollment has contributed to the shortfall, but the department’s own estimate said enrollment growth amounts to only 6.5 percent of the total shortfall.
According to DHHS, the biggest driver in the 2012 shortfall — nearly $30 million — was the result of a new claims system that caused benefit payments that should have been settled last year to be paid this year.
Another claim by LePage was that Maine’s welfare program has grown by more than a billion dollars in the last decade. This one is tricky because the governor did not define welfare. In the past, LePage has used a broad definition for welfare, so he could be correct.
As for MaineCare, though, the program’s expenditures have doubled in the last decade, as LePage said, but since 2006, costs have increased by only about 9 percent.
Ben Grant, chairman of the Maine Democratic Party, was less impressed with LePage’s speech but he also called out Republican lawmakers for failing to stand up to LePage. He said Democrats are ready to reach across the aisle.
“Does the GOP want a partner … or are they just going to meekly knuckle under to LePage’s threats?” he said.
Democrats clearly differ from the governor on energy. While they have promoted energy efficiency as the best way to bring down costs, LePage has challenged the efficacy of efficiency.
“The cheapest gallon of oil is the one we don’t burn. That’s why we must invest in efficiency,” said Sen. Seth Goodall, D-Richmond.
The two sides differ on the role of renewable energy sources. LePage said he thinks renewables should be part of the equation but he doesn’t support a citizens’ initiative that would impose a mandate on renewables.
One of the best things the state can do for renewable energy, the governor said, is to remove the restriction that says 100-megawatt hydroelectric dams are not renewable. Under current statute, hydropower projects that generate less than 100 megawatts are considered renewable but larger projects are not.
There appears to be some common ground on education initiatives, but again Democrats want to see more details. LePage said he plans to introduce “a series of reforms related to Maine’s teacher effectiveness policies.” Although he didn’t offer details, one option could be tying teacher pay to performance, something that could face opposition by the Maine Education Association.
The governor talked about providing more options for students, especially in technical education, an idea that likely has bipartisan support. But he also has said he plans to introduce legislation addressing school choice and perhaps vouchers, an idea that has been divisive in other states.
How the governor rolls out his agenda in the coming weeks and the details of his proposals could set the stage for compromise or combat.