As he struggles to close budget shortfalls, Gov. John Baldacci has begun borrowing from a playbook that dates back to the early 1990s. In those years, Maine was hit hard by a national recession. That recession devastated employment and spending, which in turn crimped the flow of tax dollars to Augusta, resulting in dramatic budget gaps like what Maine is seeing today.
John McKernan, the Republican governor serving 1986-1994, resorted to a bag of tricks in balancing the budget. In some ways, Mr. McKernan had it easier in working with a Legislature controlled by the other party. Both Democrats and Republicans had to shared the credit — or blame — for the fixes that emerged through those lean years. Today, Democratic Gov. Baldacci and his party’s majority in the Legislature get pummeled for the steps they’ve taken, in part because they are the sole party in power.
Most recently, Gov. Baldacci proposed what’s called a “payroll push,” a scheme that moves a few days of payroll into the budget cycle that will fall under the next governor’s tenure. By doing so, the state would save $3 million, restore some longevity raises and eliminate three state shutdown days.
For the most part, the governor has avoided fiscal fancy footwork, but this latest move is a clear step onto gimmick ground. Such fixes inevitably haunt future administrations.
If Gov. Baldacci is willing to venture into this territory, he should consider the other approaches Gov. McKernan used and learn from them. One was so offensive to the public — borrowing from state pension funds — that it prompted passage of a constitutional amendment banning the move. Another — taxing certain junk foods — was so reviled that the phrase “snack tax” can barely be said today without a tone of scorn and derision. But some of Gov. McKernan’s fixes were reasonable.
If the Democratic governor and Legislature were to propose some of the budget fixes approved by Gov. McKernan, local Tea Party sympathizers would want to boil them in their pot.
Consider that the McKernan budget deficit plan included hikes in fees for licenses to drive, owning a pet and fishing commercially; state park admission was raised — as was the gas tax; the sales tax was extended to foods such as potato chips, doughnuts, pies and cakes.
A surcharge was added to the state income tax so a married couple filing jointly on taxable income less than $75,000 paid an additional 5 percent of taxes. Couples with incomes higher than $75,000 paid the 5 percent surcharge, and a 15 percent surcharge on the income over $75,000. A new, higher-income tax bracket was created. And those paying corporate income tax paid a 10 percent surcharge.
The sales tax was increased, temporarily, from 5 percent to 6 percent.
To some degree, Gov. McKernan can be judged a success in that the state survived the crisis. He made tough, but pragmatic decisions, even when they conflicted with his fiscal conservative ideals. Gov. Baldacci can leave office in less than a year having kept his pledge to not raise taxes. Or he can consider what a Republican governor did.