Wednesday, April 23, 2014
The Maine Legislature is scheduled to adjourn in mid-June. Before doing so, state law requires it to pass a new balanced budget for the next two years ending June 30, 2015. This public document will explain to Maine taxpayers how their elected state legislators will be spending their hard-earned tax dollars.
Three months ago, the LePage Administration submitted to the Legislature a proposed two-year budget that balances tax revenues with government spending by closing a projected $800 million hole. It’s now the responsibility of our state legislators either to adopt the budget as is, or to come up with their own plan that matches taxes with spending from mid-2013 through mid-2015.
Unlike in past years, the proposed LePage budget does not include hundreds of millions of federal “stimulus” money flowing from Washington, because there isn’t any. It does not include a stack of several hundred million dollars of unpaid bills owed to Maine hospitals, because it’s time Augusta repaid that debt. And, it does not include a gimmick to save money by sending home 13,000 state employees without pay for ten days each year.
A crucial though uncomfortable piece of the proposed LePage budget is to eliminate “revenue sharing” for the next two years. If passed, it will reduce spending by about $200 million, closing the $800 million budget shortfall by 25%.
Revenue sharing is when state government sends back to Maine cities and towns some of the taxes collected in Augusta to assist the municipalities in paying their bills. A specific formula computes how much each city and town receives based on its population, property values, and other factors. One goal of revenue sharing is to help level the playing field between our more affluent and more disadvantaged communities.
Here’s the problem: Augusta is out of money, and Washington is flat broke and $17 trillion in debt. Where is the $200 million to fund Maine revenue sharing going to come from? Government overspending seems to have caught up with career politicians at every level.
Many municipal officials across the State have claimed that the elimination of revenue sharing will cause property taxes to rise as local residents will be asked to make up the money that stops flowing from Augusta. However, as the graph below shows, property taxes have already more than doubled over the past 21 years, while inflation has risen by only half that amount.
Like Maine families, our state, city and town governments need to tighten their belts and stop overspending, rather than raise more taxes. At the municipal level, revenue sharing from Augusta accounts for, on average, only 3-4% of the annual budgets. Fiscally disciplined city managers and town councilmen throughout Maine are finding common sense ways to share or consolidate fire and police protection, road maintenance, sanitation services, and other essential services to find that 3-4% annual savings.
Portland area homeowners pay, on average, $3,000 every year for property taxes. If local government and school programs had grown at the rate of inflation during the past two decades, their property taxes might be half that amount. I bet Maine families struggling through the worst recession in 70 years could make good use of that extra $1,500 in their pockets every year.
Big government levies high taxes to pay for its overspending. That drives away business investment and jobs. A better future for Maine families is one with smaller government, lower taxes, less borrowing, and more jobs. Let’s see if the Maine Legislature embraces this fiscally healthy path in its forthcoming state budget.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs.