AUGUSTA, Maine — After six years in office and dealing with a divided Maine Legislature in his final two years in office, Gov. Paul LePage at times seems like he’s in a frustrating no-man’s land between affecting policy and leaving a legacy.
The Republican governor’s second-to-last State of the State address Tuesday reflected that as well as any speech he’s given throughout his tenure, encompassing more than an hour and 8,400 words and running 1,500 words longer than his prepared text.
The subject matter, however, was nothing new. LePage highlighted old tropes — including his desire to lower taxes and energy costs and reforming Maine’s education and election systems — while glossing over context and relying more on his passion for reform than on data to make his case.
Here are four lessons the governor wanted you to take home, but with a fuller picture.
The state’s tax structure punishes wealthy Mainers.
LePage went off script during much of his speech but stuck close to the written word during this particular claim, which amplified the scale of the tax burden on Maine’s wealthiest residents.
His written remarks state: “Successful people are not the problem; they are the solution. They create jobs. They pay the most in sales, excise, income and property taxes. They already pay two-thirds of the tax burden in Maine.”
His claim: That the top 10 percent of Maine tax filers — those making more than $124,812 per year — pay two-thirds of the tax burden. That’s not exactly correct.
For income taxes, the most progressive state tax, it is close to two-thirds, but a Maine Revenue Services analysis of the 2016 tax year found the top 10 percent of earners pay about 40 percent of all state taxes, including sales, excise and property taxes. They also were expected to report 38 percent of personal income for the year.
That point in LePage’s speech had at least one specific goal: passing a proposal in his budget to sidestep a voter-approved law assessing a 3 percent tax on income over $200,000.
He and opponents of the proposal have expressed frustration with the state’s top marginal tax rate rising under the proposal to 10.15 percent, which would be the rate for income over $200,000, including income business owners report on personal returns.
A Bangor Daily News analysis found 92 percent of filers with such “pass-through income” in 2014 didn’t cross the $200,000 threshold. A separate analysis found filers in Cumberland, York and Penobscot counties would pay three-fourths of all tax revenue created by the surcharge.
The surtax comes as 2015 tax changes have also limited itemized deductions on state returns, which stands to hit some of the state’s top earners.
LePage isn’t alone on his stance on this, with a Maine State Chamber-led coalition called Keep Maine Competitive arguing that the tax punishes entrepreneurship and will make it harder to attract skilled workers.
Lawmakers shouldn’t pick ‘winners and losers’ in energy.
LePage’s narrative on energy depicted a preference for a competitive market where the best resources win. Enter environmental groups, the solar industry and, new in LePage’s casting, the three members of the Maine Public Utilities Commission.
Ad-libbing, LePage said that if he had the ability, he’d fire all of his PUC appointees over their revision of a solar power incentive called “net metering.” The ruling left solar advocates unhappy, too. Net metering allows solar customers bill credits for times when they generate more electricity than they use.
Related to decision is a debate about whether that system is fair. Before the PUC took up the question, legislative debate over a broader solar policy was framed, at times, as a fight between haves and have-nots.
LePage picked up that thread in his speech, saying the PUC made the state’s solar industry as a winner, pleasing southern Maine liberals to the detriment of the economy and poor and elderly Mainers. It’s based on the idea that net-metered solar customers pay less for electricity delivery, prompting utilities to tap other customers to pay a larger portion of the total fixed delivery costs.
Solar power advocates argue that the entire state benefits from greater use of a cleaner Maine-based energy source, and a PUC study found that power from a solar installation generating for 25 years delivers value of 27.2 cents per kilowatt-hour back to the grid.
LePage’s six-plus years of setting Maine energy policy is not immune to claims that he’s also picked winners and losers. The clearest and most recent example is a $13.4 million subsidy going to four biomass generators who, as a condition of getting the taxpayer money, had to show regulators they could not compete in the regional wholesale energy market. The bill, signed by LePage, was touted as a way to help loggers preserve a market amid a rash of paper mill closures.
LePage’s administration also pushed to have electricity customers help pay for expanding natural gas pipelines that serve the fleet of gas-fired generators that serve most of New England’s load, which the PUC approved — if other states follow.
Nuclear and oil generators participating in the regional market complained to federal regulators about the “state pipeline scheme,” arguing such support from any New England electricity customers would amount to picking winners and losers.
LePage reiterated his concern about preserving competition in regional energy markets during an energy briefing Friday, saying the current system is not fully deregulated or competitive. He called deregulation “the worst thing we could’ve done.” Before deregulation, utilities owned generation and the power lines and operated them as a monopoly under the oversight of the PUC.
That issue and others that have caught LePage’s focus involve regional, national and international influences on energy prices and energy policy, making it a difficult area to advance an agenda by one state alone. Gas and hydropower were major reasons LePage testified before Congress on energy policy in 2015.
LePage looks to Pennsylvania and sees abundant and cheap natural gas. In Canada, there’s a plentitude of cheap hydropower. And in the northern parts of the state, wind turbines turn on behalf of southern New England states fulfilling renewable energy goals.
So far, those have been areas of little progress, relying on states or regulatory bodies outside Maine.
LePage’s narrative on energy is also tinged with futility. He didn’t discuss successes touted in the past, such as a reduction of homes reliant on No. 2 heating oil.
He also didn’t mention the plan for the Governor’s Energy Office. The office’s director, Patrick Woodcock, resigned in early December. The administration has not announced Woodcock’s replacement.
In an energy briefing Friday, LePage said lobbyists and industry money taints the legislative process.
“There’s no sense in replacing him,” LePage said. “You know why Patrick Woodcock left? Because he couldn’t get anywhere with the Legislature in the state of Maine. Just wasting his time. And, frankly, it is wasting your time dealing with the Legislature.”
Everyone finally agrees about public school reform.
LePage has proposed numerous education reform initiatives throughout his tenure but none matched the scale of what he calls for in his latest state budget proposal. But past attempts to consolidate and regionalize school management — most notably under Democratic Gov. John Baldacci — have failed.
During his speech, LePage highlighted a meeting with the Maine Education Association — the liberal teachers union that is often a political foe — saying they “really like the concept” of his proposal for a statewide teachers’ contract.
On Thursday, in his first comments after the speech, LePage said the mood in the House chamber changed when he brought up education, saying “one side stands up and applauds and the other side stands there and scowls, with the exception possibly of when I talked about education.”
“It dawned on me at that point that many people in the audience on both sides of the aisle recognize that we have a serious accountability problem in education,” he said. “It’s not a matter of having enough money. It’s a matter of how the money is spent.”
While most lawmakers support those broad statements, there’s still disagreement on LePage’s sweeping education proposals, ranging from consolidating the administrative structures to revamping the school funding formula to lifting the cap on public charter schools.
MEA President Lois Kilby-Chesley confirmed Wednesday that she and other union officials held a cordial meeting with LePage last week but that the discussion was unspecific.
“He sees it working, but we’re a little more cautious than that,” she said.
Funding and accountability remain fundamental roadblocks. LePage regularly trumpets the fact that Maine now spends more per student than at any time in its history — in part a result of declining enrollments — while the union points to the fact that state government has never hit the 55 percent school funding mark set by a 2004 referendum. He has regularly clashed with the union and allied Democrats over efforts to implement a school grading system.
There is also doubt among lawmakers such as Sen. Rebecca Millett, D-South Portland, co-chairwoman of the Education Committee, who recently voiced concerns about “the amount of education policy” that LePage “is trying to ram through the budget process” because they require a long conversation and a lot of work.
“This is his attempt at having a legacy but in education, it’s such a big slice of our pie that affects so many people in our state,” she said.
It’s not just Democrats. Rep. Paul Stearns, R-Guilford, a retired superintendent, said LePage’s proposal to cease funding for superintendents is probably a nonstarter for many lawmakers.
“To just say we’re not going to fund that component is disingenuous,” he said. “You can always find a better way, but let’s make sure it’s better before we jump.”
LePage knows he has some support at the State House, but his optimistic tone glosses over what are sure to be major friction points on proposals so numerous and far into the details of government bureaucracy that it will be difficult for this debate to engage the public.
However, his messaging strategy could help him win allies now and credit into the future — even if he asks for a mile of policy changes but gets only a few hundred yards.
Citizen-initiated referendums are turning Maine into a liberal economic wasteland, voters didn’t understand them and the process should be made harder.
Last year was a historic one for ballot measures, with four questions passing that tilted Maine in a progressive direction: raising the minimum wage and passing the education surtax as well legalizing marijuana and ranked-choice voting.
LePage opposed them all, but he railed most against the tax on high-income earners and the minimum wage hike. In his speech, he said Mainers “did not read the legislation” behind ballot questions and “didn’t know that it would destroy a fragile economy.”
Those two points are hard to prove or disprove. The Maine Revenue Forecasting Commission hasn’t yet weighed in to gauge the questions’ potential impact and while we can’t quantify how informed Maine voters were, pre-election polling data from the Portland Press Herald suggest that less-interested voters helped swing these elections.
But the governor made larger point about Maine’s referendum process, saying “liberals … are doing an end run around the Legislature by hijacking” it.
The process has indeed been dominated by progressives in recent years. In 2016 alone, the five pro-referendum campaigns spent more than $17 million, and recent ballot questions have driven progressive change, including 2012’s legalization of same-sex marriage.
However, LePage too wanted to play the game. In 2015, he pushed a referendum to eliminate the income tax, but the Maine Republican Party fell short in qualifying it for the 2016 ballot and it has been stalled since.
It’s also worth noting that all of last year’s referendum efforts came after failed bids in the Legislature, so the debates didn’t come out of nowhere. Still, LePage, Republicans and some centrist Democrats are proposing making it more difficult to qualify for the ballot.
But that could be stymied by more rank-and-file Democrats. After LePage’s speech, Senate Minority Leader Troy Jackson, D-Allagash, said he didn’t agree that voters “didn’t know what they were talking about.”
“They knew very well what they were talking about,” Jackson said. “They knew the Legislature had left them behind, and they want results.”