Which number is bigger: $800 million or $524 million?
It isn’t a trick question.
The first number was Gov. Janet Mills’ proposed state spending increase in her first biennial budget. Had it been adopted straightaway, Augusta’s outlays would have increased over 11 percent from Gov. Paul LePage’s final two years. The final budget for his tenure was about $7.2 billion, an all-time record.
The second amount is Augusta’s projected deficit for fiscal year 2021, the second year of the current state budget. The Legislature, led by Speaker Sara Gideon and President Troy Jackson, passed a nearly $8 billion spending package in June 2019. Mills signed it.
You can see where this is going.
If Mills had proposed (and the Legislature adopted) a “mere” 5 percent spending increase, then the state budget would have increased by about $360 million. Maine would have had $440 million in predicted “excess” revenues available for any number of initiatives — education, transportation, health care, tax reform — at the end of the biennium.
And, prudently, if an unforeseen circumstance — such as a worldwide pandemic — disrupted those expectations, it would not rend our financial house asunder. We would have needed $85 million to cover the actual difference that has now materialized.
Conveniently, the “rainy day fund” had grown to nearly $240 million as the LePage administration ended. Take out $85 million to cover the balance, and you’ve still got $155 million left. Not bad.
This is one of those unsexy areas of politics. It is a lot more fun to spend money than not spend it. “Responsibly managed state finances and provided for appropriate reserves” does not make for great glossy campaign literature. “Fought to give [insert popular group] their fair share” or “invested in [good cause] for [town’s] future” paints an elected official in a much more heroic light.
Now, unfortunately, senior officials will be forced to confront possible cuts to their programs. Instead of starting from a position of strength and simply determining what new initiatives cannot go forward, Augusta will be reactionary. The projected increase in revenue spent last fiscal year, pre-COVID, is gone.
Like the previous Democratic governor, Gov. John Baldacci, Mills will be forced to confront and weigh a variety of bad options. During her successful campaign, she promised not to raise taxes this go-round; Maine’s left-wing groups will undoubtedly be calling for her to go back on her word.
Baldacci used furlough days to generate millions in savings, as well as asking state employees to pay more towards their benefit costs. Additionally, he asked Maine’s hospitals to shoulder an outsized burden by expanding state programs and leaving the hospitals with an IOU.
None of these options are attractive. They come with telling someone — taxpayers, state unions, health providers, among others — that they will be forced to contribute more or receive less. It is a lot more fun — and politically popular — to spend money.
That is why so much of Augusta’s efforts are pointed towards a federal “bailout.” Washington doesn’t need to worry about balancing its budget. And the magic money machines at the Federal Reserve are whirring, pumping new dollars into the economy. We’re witnessing “Modern Monetary Theory” in action; we’ll see whether it works well or fails spectacularly.
Yet, when the crisis is over, we will need officials who take their financial responsibilities seriously. Washington cannot print money ad infinitum, nor can Augusta simply base its budgets on hope.
It isn’t fun. It isn’t sexy. And, yes, sometimes it comes with disappointing people, particularly your political allies.
Mills has some work to do to rein in costs. But the $800 million spending increase is greater than a $524 million revenue loss. So, ultimately, even in a worldwide pandemic, Maine’s state government spending will have increased from the last days of LePage’s administration.
That’s just the math.
Michael Cianchette is a Navy reservist who served in Afghanistan and in-house counsel to a number of businesses in southern Maine. He was a chief counsel to former Gov. Paul LePage.