The governor is looking to fill a near billion dollar budget gap over the next two years ”“ a gap that he helped create through recent tax cuts ”“ by halting revenue sharing, cutting education funding and slashing money for social services.
In 2011, the Legislature approved tax cuts as part of the biennial budget, which Gov. Paul LePage touted as $150 million in tax relief ”“ including a reduction in Maine’s top income tax rate from 8.5 percent to 7.95 percent.
Today, that means $433 million in lost revenues over two years, that has mostly benefited that top tier of the tax bracket by reducing the wealthiest Mainers’ income and estate taxes. The tax cuts mean about a $2,000 savings each year for the top earners in this state, while for regular Maine families, it equated to about a $7 reduction annually, according to Kevin Simowitz of the Maine People’s Alliance.
Seven dollars is not the difference Maine families need. Two thousand dollars would have made a real impact for regular people who are struggling to pay their bills, while for those who got the $2,000 cut, it likely meant a lot less to their family’s bottom line.
Restoring these tax cuts and reforming Maine’s tax code needs to be part of Maine’s budget solution.
In his short time at the Blaine House, this governor has a history of shifting costs to municipalities. Whether it’s general purpose aid to education or general assistance, LePage is balancing the state books on the backs of taxpayers.
Just like at the federal level, Maine has many tax cuts and loopholes that need to be eliminated or reformed. These reductions are often written by lobbyists to directly benefit those who can afford to pay the most in taxes.
In an article by the Maine Center for Public Interest Reporting, published in early 2012, the group analyzed the state’s Pine Tree Development Zone program ”“ just one of many state tax breaks ”“ which offers tax cuts for businesses that say they wouldn’t be able to create new jobs otherwise.
The program was supposed lead to about 8,000 new jobs, but the center found that “the companies that got the tax breaks have never shown that they need them in order to create the jobs, even though the law says they should.”
The program has cost Maine $46 million in lost taxes since 2003, according to the article, while never providing evidence that the companies need the relief in order to create jobs.
This is just one example of a program that was created for the right reason, but may not be functioning the way it should.
It’s important that this and other tax incentive programs are reviewed and revised to ensure they meet their intended purposes. Some programs may just need to be eliminated.
The problem, though, is not exclusive to Maine and has been compounded by the recession and slow recovery. Still, the answer is not cuts, cuts and more cuts. The answer needs to be a combination of reviewing state programs for efficiency, while considering and raising revenues to support the state’s services.
It’s been proven that putting money into services that support people ”“ like preventative health care, general assistance and education ”“ pay more in the future when people become self-sufficient, contributing members of society ”“ and taxpayers.
The governor has repeatedly said too many people are on public assistance and too many people are abusing the state’s welfare system. But in reality, the amount of people on MaineCare is not growing, but rather the cost of health care is increasing.
That’s apparent to every Mainer with health insurance, as year after year premiums continue to rise. As more and more people have lost their jobs and insurance, they have turned to emergency care when in need of medical help, and have missed the important preventative care that keeps people healthy.
In addition, those who use general assistance and other state and local social services are not typically lifetime users, nor are the majority of recipients abusing the system.
According to a 2010 study by the University of New England in Biddeford/Portland and the University of Maine in Orono, the median length of time that families reported receiving Temporary Assistance for Needy Families benefits was 18 months.
The study also showed that the higher the education level, the shorter the time of assistance. Nearly a quarter of all those surveyed did not have a high school diploma or GED. Those with higher educational levels received TANF for shorter periods of time.
This finding ”“ tying education to finances ”“ was also part of a joint report from the Maine State Chamber of Commerce and the Maine Development Foundation called “Making Maine Work.”
The study found that unemployment levels drop by the amount of education an individual attained. For those in Maine who have only completed some high school, the unemployment rate was 14.9 percent in 2010, while for those with a bachelor’s degree, it was 5.4 percent ”“ it dropped to 1.9 percent for people with doctorate degrees, according to the report.
Funding education, increasing access to health care, supporting Mainers in their times of need and reforming Maine’s tax code is the equation to a better future for this state, and will lead to a budget solution that does not cripple municipalities’ ability to operate nor their property taxpayers ability to pay their bills.
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Today’s editorial was written by City Editor Robyn Burnham on behalf of the Journal Tribune Editorial Board. Questions? Comments? Contact Managing Editor Kristen Schulze Muszynski by calling 282-1535, Ext. 322, or via email at kristenm@journaltribune.com.
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