The debate over school funding now underway in the Legislature will surely be influenced by a new state report showing the harmful effect that a 3 percent tax surcharge on high incomes could have on the Maine economy.
But Question 2, the ballot question approved by voters in November that included the surcharge, was never really about taxing the rich. Instead, it was about lawmakers failing for so many years to live up to their obligation to Maine schools by finding a way to fund 55 percent of K-12 education.
How the Legislature fulfills that obligation is up to them – just as it has always been. If lawmakers do not like the tax surcharge, which would raise an estimated $124 million, they should find another source of revenue. That’s their job, and it’s time for them to do it.
They’ve ignored it long enough. Voters in 2004 approved the measure establishing the 55 percent state-funding level, and the state edged toward that goal for the next few years, until the economy collapsed in 2008. It hasn’t come close since – the gap between the state mandate and actual funding was around $240 million in 2015.
It wasn’t necessarily an aversion to state education funding that caused the gap, but rather wide disagreement on how to pay for school costs. The backers of Question 2 decided on the 3 percent tax surcharge on marginal incomes higher than $200,000, and voters approved it by a slim margin last November.
But just as with the 2004 referendum, state officials are threatening to ignore the wishes of voters on school funding.
Gov. LePage has made opposition to the surcharge one of his central themes, saying it will devastate the state economy. Meanwhile, he’s proposed a budget that cuts school spending by 2 percent next year, and would mean less money for 65 percent of the state’s school districts.
The governor’s office recently released a report backing up the governor’s claims. The additional tax, the report says, would cause people to leave the state, or dissuade them from coming here to start a business, and others would shield income from taxes.
As a result, the report says, private-sector employment, real disposable income, population and gross domestic product would all decline in the first year, and the negative effects would accumulate as the years go on.
The report contains some questionable assumptions on just how much tax policy influences people’s movements in and out of Maine. But it is certainly resonating with Republican lawmakers.
One bill, L.D. 571, from state Sen. Dana Dow, R-Damariscotta, would scrap the 3 percent tax and instead use marijuana sales taxes, among other items, for school funding.
This is why we came out against Question 2 before November’s election. Changes to tax policy and school funding don’t happen in a vacuum – they have to be weighed against other priorities. There will certainly be other lawmakers making a case for how to spend the marijuana funds, just as there are for all state revenue. That’s a job for the Legislature, not the referendum process.
So as lawmakers consider what to do with Question 2, they shouldn’t ignore it altogether, as the governor’s budget does, or send it back to voters, as would a bill proposed by state Rep. Heather Sirocki, R-Scarborough.
They should honor the will of voters, expressed twice now, that the state fund 55 percent of education costs, and together figure out a way to get there.