Jim Fossel: Republicans should hold firm on taxes in Augusta

The Legislature as a whole may be on indefinite hiatus thanks to the partisan bickering in Augusta, but a few legislators met this past week to get some exceedingly bad news, even if it was hardly unexpected.

The Appropriations Committee, which writes the state budget, got to hear the latest forecast for state revenue, and it wasn’t good: For fiscal year 2021, the state is looking at a shortfall of over $500 million, and for the next two years after that, it’s over $880 million. Whether they like it or not, legislators are going to be facing some tough decisions whenever they return to work.

That wasn’t the case last year, when legislators went on a bipartisan spend-a-thon, assuming the good times would last forever. When she introduced her first budget last year, Janet Mills claimed that the $8 billion proposal, which increased spending by more than 10 percent, was sustainable, since revenues were forecast to be $8.3 billion. At the time, that may have seemed like a plausible claim to the average observer, but forecasts are just as tricky in economics as they are for meteorologists. Even without considering a pandemic, many economists were predicting a recession before the next election in November. If that had been a brief, mild recession, Maine’s biennial budget may well have weathered the storm.

Well, that turned out to be vastly misplaced optimism: preparing only for a mild recession is like trying to heal the symptoms of a disease without affecting the cause. While we can’t expect that Janet Mills – or any politician in either party – can predict something like a global pandemic, we can expect them to prepare for the worst, rather than simply hoping for the best.

In the case of Maine’s last budget, it would have meant a much smaller spending increase – if any at all. Rather than increasing spending so much, more funds should have been transferred into the state’s Budget Stabilization Fund (commonly known as the rainy day fund). Even if spending hadn’t been increased whatsoever – unlikely with Democrats in full control in Augusta – and all of the money had been saved, the state would still likely face a revenue shortfall. However, it would be much smaller than the current yawning gap.

The decisions facing legislators would also be easier because baseline spending wouldn’t have increased as much. It’s always difficult for legislators, at the state or federal level, to face the prospect of actually cutting spending – not just slowing the rate of increase. That means cutting programs that people have come to depend on, laying off employees and generally causing lots of people to be mad at you. During the last budget cycle, Republicans in Augusta did actually point this out, to their credit: They repeatedly questioned Mills’ claims that her spending plan was sustainable and responsible. In the end, though, rather than insisting on greater fiscal responsibility, enough Republicans voted for the budget to give it the bipartisan support it needed to pass.

This time, Republicans shouldn’t give in so readily. If the Legislature returns to session before the election, minority Republicans will still have some sway over the budget process, and they should use it. Their primary goal in the event of any negotiations on a supplemental budget ought to be to stop any and all tax increases. During the last budget talks, when we still had a surplus, there were plenty of proposals from Democrats in Augusta to raise taxes, but the Mills administration wisely disregarded those nonsensical ideas. Raising taxes is never a good plan, but it’s especially unreasonable when the government is taking in more money than it needs.

Of course, circumstances have changed dramatically since then. Now, the Mills administration might see tax increases as more politically palatable than painful spending cuts, and give them more careful consideration. Proposals that would have been seen as completely counterproductive or unnecessary a year ago could be justifiable to many more people today.

Republicans should not budge on taxes, however, neither in this budget nor in any future budget. Maine’s tax burden is still far too high, and liberals should not be allowed to use the pandemic as an excuse for tax hikes. When the state had a surplus and they had the majority, Democrats weren’t willing to cut taxes, so Republicans shouldn’t consider tax increases now, either.

Instead, they need to hold Democrats accountable for their spending spree and force them to live within their means for a change.

Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins.
He can be contacted at: jwfossel@gmail.com
Twitter: @jimfossel