December 7, 2013

Mike Tipping: State budget debate pits Maine people against big corporations

Our lawmakers in Augusta face a clear choice between the naughty and nice lists.

This week, the task force charged with recommending at least $40 million in tax loopholes to close as part of the state budget process ended its deliberations without delivering a clear set of recommendations. Instead, it appears the task force will put forward a long, varied menu of options to the Legislature’s Appropriations Committee before the end of the year.

This leaves more work to be done and many important decisions to be made about how exactly to close the state budget gap, which will likely be a central debate in the upcoming legislative session.

Luckily, not all of the budget choices ahead of us are difficult ones to make. In fact, reviewing the budget-related proposals currently on the table reveals a rather stark divide.

One set of options would place more of a burden on everyday Mainers. Another set would instead target lobbyist-created loopholes that have allowed large corporations to avoid shouldering their fair share. Let’s call these two categories the naughty and nice lists.

At the top of the naughty list is doing nothing and allowing Gov. LePage’s proposed cuts and the resulting property tax increases to go into effect.

LePage was supposed to find $30 million in efficiency savings in the state budget. Instead, he came back with a plan to slash funding for education, early childhood programs and children’s health and to pull more money out of already pared-down municipal budgets.

His plan to cut state revenue sharing to municipalities, while at the same time downloading more services, would make higher property taxes unavoidable. Increasing these local taxes is among the more regressive ways of raising revenue.

In short, LePage’s proposal would place the burden of the budget squarely on those who can least afford it and, by targeting children and education, would undermine the future of our state.

Other proposals that also deserve a lump of coal include the idea that has been floated to cap funding for Opportunity Maine, the student loan relief program that helps people to achieve a college education and then stay, live and work in Maine.

One of the central points of Opportunity Maine is that it allows young Mainers to plan for the future. Cutting off long-term funding would mean breaking faith with Maine students and fatally undermining the guarantee that the program is meant to represent.

In order to head off the damaging cuts and tax increases proposed by LePage, the Legislature will have to go beyond the $40 million figure for tax expenditures to be eliminated.

Luckily, there are plenty of proposals on the nice list: loopholes we can eliminate that will help to close the budget gap while also making our tax system more fair. These are mostly tax exemptions for big business that have remained on the books, despite their drain on state resources, because of the power of corporate lobbying.

Loopholes to close include removing the big bank tax exemption on portfolio management services; eliminating accounting tricks that allow large out-of-state firms – mostly oil and gas companies – to pay less in taxes, and prohibiting the use of offshore tax havens.

These are all common-sense steps that we should be taking anyway to make the tax playing field more level, but they also have the added benefit right now of helping to fill the budget hole.

One of the most obvious items on the nice idea list is removing the business equipment tax subsidies for big-box retail stores. These programs were put in place to help businesses make strategic investments, not subsidize the cost of shelves at Walmart. Eliminating just this one loophole will save the state $3 million.

I happen to think Walmart, the most profitable retailer in the country (and which pays some of the lowest wages) can afford to take the hit slightly more easily than can the children of their employees.

There may also be other options that become available during the budget process – the LePage administration has been slow to provide the information necessary for the task force and the Legislature to evaluate all of Maine’s tax expenditures – but at this point we know enough to make some clear, values-based judgments.

Just because the choices are clear doesn’t mean the process will be easy. Corporate lobbyists will do everything they can to protect their own interests, but for all their money and influence, they don’t have the final say. Our state budget is a statement of our collective priorities, and we should make sure it represents the best values of the people of Maine.

Mike Tipping is a political junkie who blogs at MainePolitics.net and works for the Maine People’s Resource Center. He can be contacted at:

writebacktomike@gmail.com

Twitter: @miketipping

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