Thursday, June 20, 2013
Special to the Press Herald
At each of our recent debates, Charlie Summers has used the same line over and over: "Angus took a surplus and turned it into a billion dollar deficit and left us with the highest tax burden in the nation."
No part of this statement is true. Contrary to a Truth Test in this very paper ("King TV ad correct about cutting taxes, but not about deficit," Sept. 9), economic and state budget experts have stated repeatedly that there was no deficit.
Just ask University of Southern Maine economist Charlie Colgan and Jack Nicholas, state budget officer in my administration, both of whom appeared in a video on our website -- there was no deficit.
What Charlie Summers (and the millions of dollars of negative ads from the U.S. Chamber of Commerce and Karl Rove on his behalf) are calling a deficit is actually a projection made every two years before the state budget process begins: the "structural gap calculation."
It is a projection of revenues and expenditures based upon what would be spent if every program on the books were funded at its expanded and legally authorized limit. It is a theoretical calculation, because all the programs are never funded at those expanded levels. It is a "wish-list" projection, not a budget.
The governor then builds the budget based upon projected revenues as the limit of what can be spent, and this budget must be balanced -- there can't be a deficit.
In other words, the figures from the structural gap calculation have nothing to do with the budget as actually presented and passed, any more than a prediction made last spring that the Red Sox had a shot at the pennant has to do with what happened this fall (alas).
The best way to illustrate this is with a review of structural gap projections going back 30 years, through the administrations of four Maine governors.
In the last 24 years, every budget process except one has started with a projected structural gap, including the $755 million gap currently projected for the budget now being prepared by Gov. LePage for next year. But he will submit a balanced budget in January, just as I did every other year for eight years.
The other important thing to note is that the size of the gap has everything to do with the economy and very little to do with spending. The good economy in the mid-1980s and then again in the mid-1990s is reflected in smaller structural gap projections, but the downturns in the economy are reflected in larger structural gap projections in the early '90s and for most of the period from the year 2000 to now.
And this is a national phenomenon, by the way; 46 other states experienced major budget challenges as the economy unraveled after Sept. 11 and then again in the aftermath of the economic crash in 2008.
Unfortunately, the fact that Summers keeps using this "deficit" line means one of two things -- either he doesn't understand the Maine budget process or he is being deliberately misleading.
Now about those taxes.
My administration cut taxes 18 times, for a net tax reduction of more than $400 million a year by the time I left office. Those are the facts.
When Charlie Summers says that Maine had "the highest tax burden in the nation," I presume that he's using the calculation of the Tax Foundation, which does an annual comparison of the states by comparing total taxes collected (state and local) to our total personal income.
It's true that in the '80s and '90s, Maine ranked at or near the top of this list, but the Tax Foundation later admitted that these calculations were wrong because they did not take into account the fact that a huge part of the total taxes paid in Maine come from out-of-state property owners. In other words, they were counting those taxes but not the incomes of the people who paid them, making us look a lot worse.
Finally, in 2006, they corrected this and, lo and behold, we dropped from first to 15th overnight. Not as low as we would like, to be sure, but not even close to first.
So in the remaining debates, I hope we can talk about the issues that face the country in the coming years and quit with this billion dollar deficit stuff and misrepresentations about taxes. The people of Maine deserve better.
Angus King is a former governor of Maine and an independent candidate for U.S. Senate.