While Democrats and Republicans have settled the fascinating free-for-all in the gubernatorial primary race, one of the equally interesting stories of last Tuesday’s election was the message sent from voters about taxes and spending. They didn’t like this tax reform, and yet they were ready to keep spending.

How is that possible?

Fifty-five percent of state legislators voted in favor of the reform. It lowered the income tax, extended the sales tax to 102 new categories of services and products and changed how we calculate itemized deductions.

It was complicated and it did nothing to control spending.

According to the roll call vote on L.D. 1088, original passage of the reform split mostly along party lines. With the exception of one Republican, Sen. Peter Mills, the GOP said “no” to tax reform. Democratic Reps. Andrea Boland, Herbert Clark, Peggy Pendleton, Michael Theriault, Charles Shaw and Michael Willette joined the Republicans in opposing the change. The rest of the Democrats pushed through the most bold tax reform in the last 40 years.

On Tuesday, however, 60 percent of the 307,077 votes cast supported its repeal.

Maine, therefore, will retain its status of having one of the highest personal income tax rates in the nation. Anyone earning more than $20,000 annually still will pay 8.5 percent for income taxes.

Tuesday’s vote also means the Legislature will continue to struggle with the wide swings in revenue that come with changes in the economy.

When times are good, and money pours into the state’s tax coffers, a majority of the Legislature opts to spend every nickel by adding programs, hiring state employees and expanding their health and retirement benefits.

When revenues drop, programs are cut. However, state employees and their benefits usually are protected. That’s one reason why core operating costs remain high for state government.

Further down Tuesday’s ballot, bond issues for alternative energy, transportation and water quality passed comfortably. The fourth bond issue, an economic development bond, slipped through with 51 percent in favor. No matter the margins, a majority of voters favored spending money for projects they perceived as valuable.

Perhaps it is because the bond package had broad, bipartisan support from two-thirds of the Legislature.

What if the ballot questions for bonds had been worded like this: “Do you want to sign a loan for $108 million and pay an additional $26 million for interest on the loan?”

If we put the borrowing in context with this footnote: “the way, there’s a billion-dollar hole in the upcoming budget, and we have an unfunded $3 billion liability for the state retirement system,” then voters might have voted differently.

We also pass bonds because many come with matching funds from the federal government, which now has $62 trillion in accumulated debt.

Hey, it’s someone’s else’s money, so a little pump-priming from the state’s account seems like a good investment. Right?

We mostly pass bonds, however, for necessities such as safe drinking water, good roads and energy-efficient buildings. We also throw the dice occasionally and pump money into the game of economic development.

Voters, however, enter into these loan agreements with very little context about the state’s overall costs and obligations. Instead, we rely on our elected officials to do their homework and to present us with their recommendations. That is why it is so important to elect people who understand the state’s finances and are in touch with the challenges of our household budgets.

That brings us back to Tuesday’s primary election. Based on the results, prudent voters should ask candidates their opinions about the stubborn facts of the Maine economy. They should ask about the state’s growing liabilities.

In turn, candidates should give candid answers about their positions; this is not a year in which being evasive should be rewarded.

Voters also should encourage all candidates to tackle tax reform again and include language that places a firm lid on state spending.

A simple tax code that includes reasonable discipline on state expenditures will not only improve their election prospects, but it also would be good for what ails us.

Now, what do you think, and what are you going to do about it?

 

Tony Payne is executive director of the Alliance for Maine’s Future, a nonprofit, nonpartisan organization that focuses on the effects of public policy on the state’s economy. He can be contacted at:

tpayne@midmaine.com