Maine Spends Too Much… But Where?

Read the full report | The next state budget has not been submitted yet, but the debates about a gap of at least $500 million between tax revenues and spending have already started calls for cuts, elimination of programs, state employee layoffs, hiring freezes, across-the-board spending decreases, and/or ideas to the raise state’s revenues with tax increases, new taxes or higher fees.

These predictable crises are fueled by the obvious fact that Maine government spends too much money, and the decisions to spend the money directly create the high taxes. Adding another complication to this problem is the fact that Maine people’s incomes are relatively low.

These factors combine for a double-whammy on Maine people, who are supporting very high state spending with below-average incomes.

Still another aspect that makes studying these threads a challenge is that tax revenues are transferred among levels of government (federal, state, county and local), which can blur the cause-and-effect relationships between taxes and spending. An example is school spending, which pools varying proportions of federal, state and local funds for something that is considered local spending.

About the author

J. Scott Moody is the Chief Executive Officer of MHPC. Scott has over 15 years of economic policy research and economic modeling experience from his work with The Tax Foundation and The Heritage Foundation. He has authored and co-authored over 150 published articles and books. He has testified twice before the House Ways and Means Committee of the U.S. Congress.