Gov. LePage delivered his State of the State address Tuesday evening. It was a comparatively sleepy affair, with few new policy ideas or programs. Lawmakers listened attentively and respectfully, but their ovations were scarce and measured.

That’s understandable, since the governor devoted the majority of the speech to his budget and proposed tax overhaul. As it stands, that plan has few champions on either the left or right and, in the governor’s defense, it’s hard to turn tax policy into the stuff of gripping political theater.

Regardless, the governor needs to play it straight with Maine taxpayers and candidly discuss how his income tax cuts hinge upon sales tax and, importantly, property tax increases.

That’s not an inherently flawed policy, but voters deserve an open, honest debate so they can assess the inevitable trade-offs and impacts on their personal finances.

After the speech, Senate Minority Leader Justin Alfond, a Portland Democrat, noted, “The governor continues to tell us just half the story. What he’s not talking to Mainers about is what’s going to happen to property taxes. What he’s not talking to Mainers about is what’s going to happen in the out-years of the next couple of budgets.”

Alfond is spot on. By 2019, state government will face the loss of the nearly $300 million in revenue that has to be “paid for” in some way.

How that happens – which programs and services might get cut or sacrificed entirely – is unclear. But Maine taxpayers will inevitably face a reckoning with the governor’s unfunded tax cuts.

Alfond is also correct about the impact of the governor’s plan on property taxes. In his speech, the governor claimed, “This plan is different from past plans. It is not a tax shift. It is a tax cut for all Mainers.”

Yes, the governor is proposing an income tax cut. But he is also proposing a sales tax increase and the expansion of its application to a comprehensive array of goods and services.

In a glowing evaluation of LePage’s tax plan in Forbes, tax reform advocate Travis Brown noted, “Government estimates based from the LePage plan would give Maine workers $176 million more from their own incomes, while the State would collect $219 million in revenue from consumption taxes.”

That’s a $43 million tax increase, although not exclusively borne by Maine residents.

But LePage’s real tax shift isn’t from income taxes to sales taxes, but from income taxes to property taxes, as evidenced by the governor’s dependence on cutting municipal revenue-sharing to partly fund his income tax cuts.

Municipalities will likely lose $250 million in revenue-sharing over two years, while also absorbing more education costs.

And while LePage proposes giving municipalities telecommunications excise tax receipts and allowing them to tax large nonprofit organizations, the municipal checkbook isn’t likely to balance, resulting in property tax hikes to make up the difference.

This is contrary to the LePage economic theory of the prior four years. Previously, that theory held that government spending must reflect the means of the taxpayers.

In LePage’s new world, even if income and sales tax revenues dip, local property taxpayers will remain on the hook, effectively funding a greater share of state government operations through property taxes that aren’t reactive to broader economic conditions.

Functionally, that’s the opposite of TABOR, putting government collections and spending ahead of taxpayer means.

It’s also noteworthy that, after years of railing against government waste, fraud and inefficiency, the governor is relying on property and sales tax increases to fund his income tax cuts.

The governor is effectively conceding that the imagined bloat doesn’t exist. If it did, he could trim the fat and cut income taxes without relying on sales and property tax hikes.

The budget reveals a little-acknowledged but fundamental ideological shift in the governor’s fiscal policy.

Republican leaders and the governor’s most ardent supporters can’t be blamed for wondering what happened to the Paul LePage they re-elected last year. It’s hard to imagine “first-term LePage” offering a budget so heavily dependent on sales and property tax increases.

Regardless, as I’ve written previously, Maine is long overdue for a comprehensive tax overhaul, and LePage’s policy prescriptions aren’t wrong-headed.

His intentions – to export more of Maine’s tax base, decrease volatility in state revenue, reduce personal and business income taxes and push municipalities to consolidate and find efficiencies – all move Maine in the right direction.

The governor simply needs to be forthright about how we get there and the inevitable tax trade-offs it entails. Unfortunately for the governor, such candor is unlikely to stimulate Republican support for his proposal.

Michael Cuzzi is a former campaign aide to President Obama, Secretary of State John Kerry and former U.S. Rep. Tom Allen. He manages the Boston and Portland offices of VOX Global, a strategic communications and public affairs firm headquartered in Washington. He can be contacted at:

[email protected]

Twitter: @CuzziMJ

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