Washington commissioners give tepid nod to Free ME

Posted Oct. 11, 2013, at 12:37 p.m.

MACHIAS, Maine — A proposal to eliminate state taxes in Maine’s poorest county to stimulate economic development received a tepid endorsement this week from the governing body of Washington County, which would be the chief beneficiary of the initiative.

J. Scott Moody, CEO of the Maine Heritage Policy Center, the conservative think tank that has proposed the initiative, briefed the Washington County commission on the proposal at the panel’s regular meeting on Thursday.

Two commissioners, John Crowley and Vinton Cassidy, initially expressed reservations or were noncommittal about the plan, which has been dubbed Free ME.

However, commission chair Chris Gardner, who previously has indicated his support for the plan, eventually managed to wrangle a lukewarm endorsement out of his fellow commissioners.

Free ME calls for eliminating state taxes in Maine’s most economically distressed county. Under a formula suggested by the conservative think tank and based on unemployment, poverty, the five-year change in population and the five-year change in private-sector share of personal income, Washington County is ranked as Maine’s poorest county, with Aroostook a close second.

The initiative, which the LePage administration may bring to the Legislature but is already running into Democratic opposition, would eliminate the state personal income, corporate income and sales taxes in the poorest county in order to spur investment and boost the local economy.

After listening to Moody, Cassidy said the concept raises many unanswered questions and that it was “too early to endorse as presented.” He called for reducing the tax burden on retirees in order to keep them in Maine and prevent them from migrating south.

“I don’t know enough about it,” added Crowley.

“It may be a little scary. … What we’re looking at is scarier,” said Gardner. He noted that the county’s death rate is exceeding the birth rate. “We’re dying, literally.”

In addition, people are migrating out of the county. “The illness is we don’t have enough people here,” Gardner said.

A favorable tax policy for retirees should be a “piece of the pie,” said Gardner, but ultimately it will contribute to Maine’s aging population.

Gardner asked Crowley and Cassidy to consider endorsing the idea. “We owe it to the people of this county,” he argued.

Cassidy clarified his remarks by saying the state’s tax policy should not seek to attract retirees but should be favorable enough to keep them in Maine. However, he reiterated his sentiment that it was “too early” to back the plan. Some aspects of the proposal could be detrimental, and it may exacerbate regional conflicts, he suggested.

“I’m not opposed to the concept,” said Cassidy, but added, “I can’t endorse it at this stage.”

Crowley said the initiative was “one finger” of the solution to revive Maine’s economy. The state needs to create an environment that brings in business and jobs, he said.

Gardner was not dissuaded. Not to publicly support the proposal would be “poor practice,” he said.

Gardner proposed a motion, winning votes from Crowley and Cassidy, supporting the concept of Free ME with the stipulation that the initiative needs to be explored in further public debate.

In briefing the commission, Moody said Maine’s tax policy is hindering business and economic growth. By contrast, Maine’s heavy tax burden has spurred growth in government dependency, particularly welfare and Medicaid, he said. Maine’s Medicaid budget is the third-largest in the U.S., and Moody said it is “eating the state budget.”

Free ME would help turn things around by focusing on Maine’s most economically disadvantaged county, according to Moody. “You’ve got to start where the fire is,” he said.

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