Recently, attention has been focused on Republican efforts to make state government more accountable, sustainable and affordable for taxpayers. The emphasis has been on making tough choices to ensure that our most vulnerable residents are protected and that the fiscal excesses and ongoing Medicaid shortfalls that we inherited are fixed so Maine can move forward.
Previous legislatures have continuously expanded state government beyond the means of beleaguered taxpayers to pay for it. The 125th Legislature has worked diligently to change the culture of state government to one that supports a job-friendly business environment that creates more taxpayers while taking less of their hard-earned money.
To create jobs and opportunity, we have enacted reforms in several key areas, including health insurance, regulatory fairness, workers compensation, educational, unemployment, Department of Health and Human Services, tax, pension and welfare reforms. We have acted to help restore confidence in taxpayer-funded organizations by exposing criminal behavior and questionable spending practices at the Maine Turnpike and Maine State Housing authorities respectively.
Given time, we believe these major reforms will benefit Maine for years to come. That is why we are also proposing forward-looking tax legislation for when Maine’s economy improves and budget surpluses return. LD 849, “An Act To Provide Tax Relief for Maine’s Citizens by Reducing Income Taxes” sets a goal of gradually reducing income taxes paid by Maine residents to a maximum of 4 percent over time. It is only triggered when state revenues grow to exceed the budgeted needs of state government.
LD 849 operates in concert with a spending cap that was signed into law in 2005 by then-Gov. John Baldacci. Extra revenues go into a fund that is used to gradually reduce the income tax rates over time until the maximum rate is 4 percent. When prosperous times return, it takes monies above the statutory spending limitation and returns them to taxpayers through gradual income tax rate reductions.
A similar version of our tax plan was enacted into law in 1995 when Republicans last held a majority in the Maine Senate, and was repealed by Democrats two years later. Earlier this year, former Governor Angus King was asked by Pat Callahan of WCSH6: “What if anything would you like to do over?” He responded by citing late Senate President Jeff Butland’s law to reduce the income tax rate over time with surplus revenues.
Unlike the previous plan, this legislation sets a statutory goal of 4 percent. Having a specific goal helps ensure that future legislatures remain committed to returning excess money to taxpayers rather than create new programs when good times return. It is responsible because it only occurs when there are surplus revenues above and beyond the needs of state government to fund existing commitments. It is a goal, not a limitation.
Current law allows government to grow at a determined rate of growth according to a statutory spending cap. So what is the real fear? Why have opponents of this tax legislation gone to extremes in trying to link it to TABOR and the state’s credit rating? That is because they are a vocal minority of government-dependent interest groups seeking an ever-increasing share and control of taxpayer dollars. Amidst their worn out claims of giving tax breaks to the rich, they fail to mention that Republicans have already removed 70,000 low-income taxpayers from having to pay any state income tax at all. These critics feel entitled to making unfettered decisions on how best to spend our money.
Republicans remain committed to struggling low- and middle-income taxpayers trying to make ends meet while working to improve opportunities for their children. Funding the budgeted needs of state government, then returning a modest amount of extra revenue to the people who earned it encourages more economic activity and more opportunities for all of us.
Sen. Jon Courtney is the Maine Senate majority leader. Courtney represents Senate District 3, which includes the York County communities of Alfred, Limington, Lyman, Sanford, Springvale and Waterboro.