March 30, 2013

Mike Tipping: LePage will lose on budget, unless Democrats make a mistake

Cuts to health care and education and punitive tax proposals are causing a grass-roots backlash.

I don't envy the position of Gov. Paul LePage and Republicans in Augusta right now.

They've backed themselves into a rhetorical corner on the budget, and even the governor's bully pulpit and veto pen aren't going to be enough to get them out of it. Their only hope now is that Democrats will make a misstep that will let them off the hook.

The problem for LePage is simple: He mostly caused the budget gap himself through his record-breaking tax cut last session, which predominantly benefited the wealthy. Now, in order to close it, he's trying to raise taxes in just about the most regressive way possible.

Not all taxes are created equal, and the ones LePage has proposed are especially bad for the average Mainer. Cutting the circuit-breaker and homestead property tax exemptions, changing the way the income tax is indexed and forcing local property tax increases by eliminating all revenue sharing with Maine towns will hit the middle class and poor the hardest. At the same time, the wealthy, for whom property taxes make up a much smaller part of their overall tax rate, will be left relatively unscathed.

These massive, unfair tax proposals, as well as LePage's cuts to health care, education and smaller but important programs like Maine's Clean Election system, have led to a grass-roots backlash against the governor's plan.

An Appropriations Committee hearing held Monday in Brewer in order to gather local opinion on the budget provides a good example.

Even though the Republican Party sent out a statewide "Action Alert" asking their supporters to flock to the hearing, only one person showed up to defend LePage's plan. The rest of the dozens of speakers argued against it and in favor of a more equitable and responsible solution.

The path for Democrats is now relatively easy. Because LePage has already ceded the ground on taxes, they can use this opportunity to both close the budget gap and begin to fix Maine's broken tax system.

In 2009, the top 1 percent of income earners in Maine paid a combined state and local tax rate of about 10 percent. The bottom 20 percent paid 17 percent. That disparity has only increased since LePage came into office.

His package of program cuts and tax breaks during the last Legislature increased the tax burden on 270,000 families (40 percent of Maine's taxpayers) while most of the financial benefits accrued to the wealthy, according to a 2012 Maine Center for Economic Policy analysis.

By putting forward a simple proposal, including repealing the LePage income and estate tax cuts and instituting something like the "Buffett rule" -- which would require the wealthy to pay at least as high a percentage of their income in taxes as the average Mainer -- Democrats can set up a straightforward contrast with the governor's budget and offer legislators and voters a real choice:

Do they want to stand for a budget that raises taxes on everyone and targets those who have been hurt most by the recession or one that asks those who have been getting all the breaks to finally chip in their fair share?

Republicans won't have much to say in their defense. They can claim that there should be more state program cuts instead, but this is undermined by LePage's own tax shift to municipalities and the admission of his own finance commissioner that there is no more "low-hanging fruit" or any easy options to balance the budget.

They could try to claim that towns are doing fine and that they can handle the big cuts without property tax increases, but anyone who has read a newspaper or been to a town meeting in the last couple years knows that local budgets are already cut to the bone.

Even LePage, as Waterville mayor in 2009, declared unequivocally that cuts like these would be "transferring the state's responsibilities back onto the property taxpayers."

The only hope for Republicans to win is for Democrats to make things unnecessarily complicated, perhaps by endorsing some of LePage's cuts or proposing some other regressive measure, such as raising the sales tax.

Democratic legislators have the upper hand here. LePage's budget is incredibly unpopular, and the alternative -- raising taxes on the wealthy -- has almost universal support. They shouldn't psyche themselves out by worrying about the reactions of Republican legislators or Gov. LePage.

I doubt that even the most hard-core Republicans, if given a simple choice, would be willing to vote for a tax hike on the middle class over closing tax loopholes on the wealthy. If they do, they won't be around long.

 

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

writebacktomike@gmail.com

Twitter: @miketipping

 

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