Almost nobody saw it coming: the massive shutdown of Maine’s many small businesses, crucial job creators in their communities. A pandemic the likes of which the world has never seen has clobbered Maine’s tourist economy – which operates year round in places as far apart as Portland and Greenville – and a sharp drop in both sales and income taxes has slashed revenues headed to Augusta, which are often then earmarked for cities and towns. Many have already announced layoffs and furloughs for departments like parks and recreation, and school districts are bracing for a steep decline in state contributions to K-12 education, even if they’ve already got their ED 279 funding information in hand.
The Mills administration’s announcement this week of a spending and hiring freeze should be ringing alarm bells in city and town halls across the state. What are towns and cities to do? How can state government respond while waiting for relief from the federal government that may or may not materialize?
One place to look for savings: the massive tax breaks afforded to corporate businesses in better times. These breaks from municipalities and the state are usually presented as job creation schemes. Certainly this is how the corporate lobbyists who roam the halls outside the Taxation Committee at the State House describe them.
General Dynamics is one of Maine’s largest employers and also a frequent recipient of largesse in the form of tax breaks. The city of Bath is out $81 million for taxes that General Dynamics’ Bath Iron Works shipyard would have paid, and the state of Maine is out $45 million. In the latter case, it’s $45 million that workers had deducted from their paychecks, but that the company kept rather than sending along to Augusta. (Full disclosure: I was part of a statewide group that lobbied successfully to reduce General Dynamics’ original $60 million request.)
General Dynamics is a wealthy multinational corporation. It pays its CEO $20 million annually (before her $6 million bonus), and has spent $16.2 billion over the past decade buying back its own stock. It claimed it needed tax breaks in order to train workers and keep them employed, ignoring the fact that funds for this very purpose are included in every federal contract it receives to build warships for the Navy. Vice President John Fitzgerald complained to Maine’s Taxation Committee, “To be punished because our owner has capital seems unjust.”
Nope. Here’s what seems unjust: City workers are being laid off, and when the state inevitably announces a curtailment because of lack of revenue, public educators and school support workers are likely to see massive layoffs for the fiscal year that begins July 1. Their income loss will be reflected in unpaid rents, unpaid taxes and bare-bones budgets just to afford groceries. The downward spiral of public revenues this time will make the recession of 2008, which triggered a curtailment under the Baldacci administration, look mild indeed.
It’s time to end tax breaks for the wealthy before more children go to bed hungry. (Schools are a major source of nutrition for the estimated 35,000 children growing up in poverty in Maine.) The measure of a government’s worth is its ability to manage the real needs of its most vulnerable populations. Cut loose the corporate welfare recipients, and use the money to shore up the towns and schools that are about to slash budgets that serve working-class people.
Let the CEOs pay the taxes they owe, even if it means going without another new yacht this year. It’s the right thing to do.
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