After months of calculations and negotiations, and a final push that saw lawmakers staying up for more than 40 hours straight, the Maine Legislature finally has a workable budget proposal. Given the realm of what is possible with state budgets to reform programs, this 2014-15 budget largely maintains the status quo, with some improvements and some regressions. But from the perspective of reality within the State House — where neither Democrats nor Republicans have enough votes to pass a budget without one another, time is limited, and Gov. Paul LePage’s antics have hindered rather than helped the budget process — this proposal is an accomplishment.
Detractors will focus on how the proposed budget would raise the sales tax to 5.5 percent from 5 percent and meals and lodging taxes to 8 percent from 7 percent. Combined, the two changes would yield state government about $178 million — not quite the amount LePage proposed to cut from municipal revenue sharing. While these are not ideal solutions, out-of-state visitors will bear some of the cost, and the tax increases would sunset in 2015. Realistically, it’s hard to imagine the small increases having a real negative effect on Maine businesses or residents. And it is completely unfair for LePage to characterize this budget as a tax increase when his own proposed budget would have necessitated increases in property taxes across the state and, at the same time, cut programs that provide property tax relief.
The proposed budget, which was approved unanimously by the Appropriations Committee and now goes to the full Legislature, would restore the Homestead Exemption property tax relief program and replace the circuit breaker program with a “property tax fairness” credit that residents would receive when they file taxes. While the changes to the circuit breaker would raise the qualifying eligibility threshold, they would also provide more benefits to renters, which is a positive development. In other taxation modifications, the budget proposal would cap itemized deductions at $27,000, drawing more money from wealthier households and conforming Maine to the federal tax code.
The budget proposal contains an item that has the potential to transform the structure of tax collections. It would create a 13-member Tax Expenditure Review Task Force to determine the effectiveness of tax exemptions and credits and would require it to make recommendations to achieve a savings of at least $40 million. The group would determine the purpose of specific tax expenditures and measure their economic impact, such as revenue loss compared with economic gain, the number of jobs retained or created, and administrative burden. This area needs scrutiny as there is currently no good way to assess whether tax exemptions and credits are delivering as promised.
On the spending side, the budget would give defense attorneys who represent indigent Mainers a $5 per hour raise — a small sum, but the right step. It would fund most of the proposals that arose from the Joint Select Committee on Workforce Development and Maine’s Economic Future to better align workforce skills with industry needs. After four years of stagnant pay levels, Republicans and Democrats agreed to allow merit pay increases for state workers. The proposed budget would reduce — though not eliminate — the number of individuals with developmental disabilities on a waiting list for benefits to help them live as independently as possible. We are pleased it would reverse cuts to Head Start, allowing the state to draw down additional federal funding.
The budget also takes advantage of savings identified by a task force that reviewed the general assistance safety net and would eliminate public campaign financing for gubernatorial candidates, while rightly retaining it for legislative candidates. It would, starting in 2016, shift half the cost of teacher retirements to towns, which will cause pain for many municipal leaders, though they will have time to prepare. The state is easing the burden a little with a proposal to incrementally increase the state’s share of education funding, starting in 2016, until the state reaches its promised 55 percent level. We’ll wait to see whether these plans actually happen.
This is not a budget worth vetoing, yet LePage has threatened to do just that, apparently because it doesn’t reduce the size of government enough or “eliminate fraud and abuse in welfare,” as he stated in his Saturday radio address. In reality, it is a compromise and does include components of LePage’s original proposal — while casting aside irresponsible provisions like eliminating municipal revenue sharing. If LePage has Maine’s best interests at heart, he will recognize the hard work and concessions that went into crafting this $6.3 billion, two-year budget. If he does wield his veto pen, however, lawmakers must come together, once and for all, and vote to override.