July 2008 Archives

It was more than fifty years ago that the late Dr. Milton Friedman first proposed expanding school choice options through the use of taxpayer-funded school "vouchers." Arguing that government-run schools, which he characterized as "islands of socialism in a free-market sea," could not be justified in a predominantly free market society, Friedman proposed funding students directly and allowing the free market to create for the nation the high quality schools it needed then and still needs still today.

Today, on what would have been his 96th birthday, the foundation which bears his name, The Milton and Rose Friedman Foundation, is sponsoring events across the nation celebrating his memory. The Maine Heritage Policy Center is hosting such an event today in Portland.

Raising awareness of Friedman's free-market vision for America's schools could not be more timely. As the Wall Street Journal noted earlier this week, this coming election pits a supporter of school choice, Senator John McCain, against an avowed opponent of school vouchers, Senator Barack Obama.  Senator Obama and his wife, it is important to note, practice school choice themselves. Their two daughters attend a $20,000-a-year private school at the University of Chicago.  To Senator Obama's way of thinking, it would seem, school choice is fine if you can afford it, but he seems perfectly comfortable forcing his less fortunate Chicago neighbors into the very public schools his own children never set foot in.

It is hard to know whether school choice will become an issue this election season or not, but if it does, the memory of Milton Friedman, recognized across the nation today, will be well served.

At the National Conference of State Legislators (NCSL) Conference in New Orleans last week, I attended a state budgeting/spending seminar that was stunning!

The incoming Speaker of the House in Florida, the Honorable Ray Sansom, spoke of trimming $7 billion from a $66 billion state budget... without any thought of raising taxes.  Sansom explained "why make it harder on businesses in a downturn?"

He said that Florida has no intention of borrowing their way out of a downturn, and in reconciling the budget with lower revenues: "we're not making 'cuts,' we're spending the money we have."

These are clearly refreshing ideas that would turn Augusta on its head! 

But the best concept that Speaker Sansom talked about was the Florida Sunset Law.  On a rotating basis, every state agency is abolished every eight years.  Eliminated...  Kaput! 

The leaders then have to re-introduce the need for each state agency.   If approved, the "new" agency has an updated mission, a modernized structure, new goals and benchmarks, plus clear ways to measure achievements, productivity and success.

If Maine had a Sunset Law - do you suppose we would still be funding a couple of high paying jobs to oversee the safe operation of the Maine Yankee nuclear power plant?

 

(HINT: It was decommissioned eleven years ago!)

 

Voters in Monmouth, Sabattus, Lamoine, Lubec and Cape Elizabeth have yet to approve school budgets for the coming year, despite several trips to the ballot box by voters in all five towns.  To the Lewiston Sun Journal's way of thinking, these exercises in direct democracy have become too messy and time-consuming.  Positions have "cemented," according to the paper, with "stalemate" as the result.  The paper goes on to suggest that the legislature rescue voters from their difference of opinion by developing some type of "budget mediation" process that "prompts discussion of a mutually acceptable solution," and lets "cooler heads prevail."  The paper is light on the details of this approach, most notably with regard to whether the decision of some as-yet undefined but presumably cooler-headed mediating body would have the force of law and thus replace a vote of the public. If so, count us out.

Democracy is messy. It takes too much time and does indeed lead to a "cementing of positions among townspeople." But it also works. The towns in question will ultimately come to a consensus on their budgets, because they have no other choice. When they do, they, and the rest of Maine, will be better off for having taken the time to do it right.

The repeated failure of school budgets in a handful of towns across Maine is a cause for celebration, not concern.  It means that people are involved, that they are invested in their schools and communities, and that they are committed to making their voices heard. This is a good thing, and one of the main reasons the budget validation process was adopted in the first place.

The latest data from the Federal Reserve Bank of Philadelphia suggests that Maine's economy has slipped into a recession.  Their State Coincident Index is a broad measure of economic activity as noted in a previous blog.  As of June, 2008, Maine's index was 145.35 which is 0.41 percent lower than the index in June, 2007 (145.95).  The only other New England state with a worse reading is Rhode Island whose index fell by 5.35 percent over the same time period.  Not surprisingly, New Hampshire has the strongest growth of 2.47 percent followed by Massachusetts (2.04 percent), Connecticut (1.48 percent) and Vermont (0.46 percent).

Click "continue reading" to view a comparative chart.

Unfortunately, the cities in question are in New Hampshire.  According to a story in the Union Leader, "The first of what is expected to be a statewide flurry of tax cap charter amendment petitions was turned into city hall yesterday morning. The petition, organized by the anti-tax group New Hampshire Advantage Coalition, seeks to amend the city charter to tie the growth of the city's tax rate to the rate of inflation . . . The New Hampshire Advantage Coalition is also working to support citizen-led tax cap charter amendments in Concord, Merrimack, Somersworth, Londonderry, Portsmouth and Bedford, as well as Rochester and Manchester."

However, Mainers may soon get their chance to correct their own run-away spending based on MHPC's model Taxpayer Bill of Rights.  Based on my cross-border shopping research with, Mainers fully understand "New Hampshire's Advantage."  Maine cannot afford to let New Hampshire win the tax/spend cap race.

The Maine Heritage Policy Center has argued repeatedly that high tax burdens depress the economy by taking money out of the pockets of taxpayers.  We have shown how Maine's high sales taxes lead Maine people to shop in New Hampshire, costing the Maine economy, and, ironically, Maine government, untold millions.

Now comes word from Vermont of the effect of a sale tax holiday there. As this Boston Globe article describes it, the recent two-day tax holiday was a huge hit. Businesses described themselves as "swamped" and were forced to hire additional help to keep up with consumer demand.

The best line from the article? ""We didn't have to do any advertising. The government did it all," said one of the business owners.  What did government do in this case?  It cut taxes and got out of the way.

There are those that would love to think that high taxes have no effect on the economy of a state. For years, we've pointed to the stellar economic growth of low-tax New Hampshire as evidence that this in not true. Who would have thought we could point to Vermont as well?

When are Maine policymakers going to get it?

As I related yesterday, the consolidation plan for Freeport, Durham and Pownal has generated opposition among folks in Freeport, who feel as though they are paying too high a share of the cost of the new district and are concerned that the influx of high school students from the other two towns could hurt the academic program at Freeport High School.

Evidently, their concerns were persuasive enough to convince the Freeport school board to vote down the consolidation plan.  This may be a first time that a school board has effectively vetoed a reorganization plan before it has been sent to voters for approval. 

Could this be the beginning of a trend?

You may have seen this article from a few weeks ago on our site or in the Sun Journal, regarding the discrepancy between private and public sector compensation in Maine.  It seems to be somewhat obvious, but the best way of approaching the question of state employee compensation is to have all of the data available to you.  One of the first sections of our new website www.MaineOpenGov.org to go live will be the state payroll.  You'll be able to search our database and see exactly what every state employee makes, and the size of their benefits packages.  Making information available to the voter should always be the first priority in a democratic society.  For more information, sign up for email notification here.  You'll be the first to know as we take www.MaineOpenGov.org live.

 

Christopher Bea, Intern

Center for Open Government

The Maine Policy Heritage Center

I recently traded in a 2007 car for a 2005 car.  At my town office, the person saw the March renewal date on the 07 model's registration papers and said "Good, this means you'll get a credit." 

Sounded fine to me!

Then we went through the forms: yes I paid the sales tax, no there's not a loan involved, got the mileage for the car I traded in, confirmed the mileage on the car I just bought...  She typed away at half a dozen forms, then came back to the window and said I owed just fifteen dollars.

"What?" I asked, "I thought there was a credit."

"Oh yes, there is."

"How much is the credit?"

"Well, the excise tax you already paid was $441.00 and the excise tax on the car you're registering today is $263.50."

"So I've got a credit of over $175.00, right?"

"Yes."

"So how can I owe $15.00 now?"

"Oh," she answered, "Augusta keeps that.  They don't return the extra for credit.  They never do that."

"So we can't credit the $15 I owe now against the $175.00 I overpaid?"

"Oh no," she cheerfully replied,  "That's different."

By this time, the line was growing behind me, I owed the town a total of $15.00 for a title transfer, agent fee and something else called "fees."   It was clear this was going nowhere, so I wrote out the check for $15.00 and muttered "Welcome to Maine."

 

I already knew that the Vehicle Excise Tax in Maine is near the top, and that it's charged on the full sticker price, no matter what you actually paid for the car, but I didn't realize until now that if you ever overpay the Vehicle Excise Tax... your "credit" is on paper - but not the kind you can fold up and put back in your wallet. 

A quick look at the Department of Education's reorganization plan website would have the casual observer thinking the school unit consolidation effort is going swimmingly.  All down the list of merger proposals one sees that the Department has added a bright red "APPROVED" to indicate the proposals have won the blessing of Education Commissioner Sue Gendron.  Looks like things are going well.

As Vicki Wallack helpfully observed in a recent column, however, the vast majority of the "APPROVED" proposals are so-called "alternative" plans, submitted by districts that are big enough already that they need not consolidate with a neighboring district at all.  Only two proposals involving actual consolidation have been approved by voters thus far: a Bath-area proposal that predated reorganization and a merger plan for five districts in lower Kennebec County.

But what of the Falmouth/SAD 51 merger plan that the state has been holding up as a model for others to follow?  It turns out the Falmouth has been thinking twice about the idea of consolidation.  According to a report in the Forecaster, representatives from Falmouth went on bended knee before Commissioner Gendron last week to see if they could back out of the merger plan and adopt an alternative approach instead.  Unsurprisingly, the Commissioner said no.

One of the only other APPROVED merger plans, between MSAD 53 and MSAD 59, was defeated by Madison voters June 10, sending planners there back to the drawing board.

One of the other merger plans near completion is the Freeport/Durham/Pownal consolidation proposal, which, though only finalized days ago, has already led to the organization of an opposition group called "Freeport Families for Education."  Among that group's concern are the cost-sharing provisions of the plan and the potential overcrowding of Freeport High School that is likely to result from the addition of hundreds of kids from Durham and  Pownal.  High schoolers in those two towns have school choice today, but very few choose to attend Freeport. If the merger plan is approved, they won't have a choice.

So, two consolidation plans approved by voters thus far, one voted down, the one held up as a model for Maine getting cold feet and trying to back out, and yet another inspiring an organized opposition group.  Not a great track record so far...
 

The state of Utah is moving to a 4-day workweek in a bid to cut state spending, according to this AP report on MSNBC.com.  Just keeping government buildings closed on Fridays will save $3 million, according to state officials.

I have a better idea. How about we go to a four-day week as well,  but let's keep 8-hour days, cut state employees to 32-hour weeks, and cut pay and benefits accordingly.  For FY 2007, Maine spent $413 million on "personal services," which is salaries, health insurance, and retirement benefits for state employees. Cutting that by 20% would have saved $82 million.

The National Center for Health Statistics released a report last month finding that fewer than 1 person in 20 in Maine has been uninsured for more than a year (half the U.S. average and half that reported last fall for Maine by the U.S. Census Bureau, page 22 of the report).  However, Maine fares poorly with regards to adults with private health insurance - just 65% of Maine adults have private insurance compared with 70% nationally and 78% in nearby Connecticut (page 14).

Last fall, I authored a report on Maine's uninsured rate using U.S. Census Bureau figures, which tend to report the uninsured at that moment in time rather than the longer-term uninsured.

Given the very low number of longer-term uninsured adults in Maine and our low rate of people with private health insurance, maybe the public policy focus should be on expanding private health insurance choices, competition and enrollment and not on further expansions of public programs like Medicaid. 

The Bangor Daily News reported yesterday that Maine has dropped 6 places, from being ranked 33rd nationally to now being 39th on the Milken Institute's State Science and Technology Index.  The index is designed to indicate the extent to which a state possesses the human, intellectual, and capital resources required for entrepreneurship and jobs in the modern technology-driven economy. 

In short, we're not looking so good.

In particular, Maine scored very poorly with regard to its production of scientists and engineers:

• We ranked 50th in the percent of Graduate students in Science and Engineering
• We ranked 50th in number of PhD's in Science and Engineering per 100,000 25-34 year-olds
• We ranked 50th in the number of Science and Engineering Post-doctorates per 100-000 25-34 year-olds

These statistics in turn have an impact on the index's work force indicators, which measure the number of engineers, scientists, computer programmers, and so forth per 100,000 civilian workers.  We ranked 44th in the nation on that set of indicators.

That, in turn, affects our ability to attract R&D investment from outside the state, from both the private and public (government) sectors. We're 50th in R&D dollars per capita.

Think about what that means. Places like Louisiana, the Dakotas, Mississippi, and West Virginia are doing a better job attracting high tech investment than we are.

By the way, our two closest neighbors, Massachusetts and New Hampshire, are ranked 1st and 9th, respectively. From 2004 to 2008, New Hampshire went up four spots from 12th to 9th while we went down six spots from 33rd to 39th.

Do our leaders get it? Nope. My favorite line from the BDN article:

The governor was upbeat about the latest results, however.  "This reflects that we are doing what we need to do," he said...

It does?

By the way,  Forbes magazine will soon release its ranking of business-friendly states. We were 48th last year.

The Bangor Daily News reported that the Maine Department of Health and Human Services has delayed $39.6 million in Medicaid claims one week to push the transaction into the 2009 fiscal year, which began on July 1.  Apparently, accrual accounting is necessary for businesses, but playing games with cash transactions to balance the books is just business as usual for Augusta. 

It is because of such games that the Governmental Accounting Standards Board issued GASB Statement 45 to require governments to report future retiree liabilities accurately.  In March 2008, The Maine Heritage Policy Center released a report noting that Maine has promised to pay its state employees and teachers $4,756,000,000 in unfunded retiree pension and health care benefits.  Clearly the strategy in Augusta is just to "push" that $4.8 billion bill onto our children and grandchildren and future elected officials.

 

One of the basic cornerstones of every free and democratic society is the availability of information.  Without information, the sovereign rights of the people are meaningless.  Without information, the voter is nothing more than a game show contestant, relying on blind luck to pick the door that has a new car behind it.  The strength of a democracy relies on the knowledge of the citizen.  As Thomas Jefferson wrote to Richard Price, the Welsh political theorist, "Whenever the people are well informed, they can be trusted with their own government..."

While information was a rare and precious commodity in Jefferson's day, today we live in an 'information age.'  We hope that our government reflects the wealth of information that we, as voters have at our fingertips.  It is this very hope that is reflected in the growing movement for government transparency. 

 

In 2006 the US Congress passed the Federal Funding Accountability and Transparency Act of 2006.  The President signed it into law less than two weeks after the House and Senate had both passed it with virtually no opposition.  The bill was co-sponsored by forty-seven Senators including John McCain, Barack Obama, Hillary Clinton and both Senators from Maine.  One might think that this sort of bipartisanship is only possible when there's a federal pay raise involved.  Instead, the Act sets out to show the public exactly how much money the federal government gives out and to whom.  This information is to be made available online, open for all to see. 

 

While on the federal level, a detailed breakdown of contracts and spending is sure to be somewhat overwhelming, it seems that a state like Maine may be just the right size.  The Maine Policy Heritage Center is currently working with state officials to create "maineopengovt.org," a web-based application detailing Maine state spending.  As we approach the launch date of late July 2008, sign up for email notification (link) and check out MaineOpenGov.org for details on what the portal will show, how to use it, and what it means for the citizens and taxpayers of Maine.

 

Christopher Bea, Intern

Center for Open Government

The Maine Policy Heritage Center

Though it seems to have escaped the attention of most newspapers, the Forecaster reports here that Bath-area RSU 1 takes effect today as the state's first "reorganized" school district.  This means the end of the Bath municipal school system as well as School Union 47, which, until today, included Arrowsic, Georgetown, Phippsburg, West Bath and Woolwich.  Georgetown residents voted against joining the RSU 1, but the four other towns of School Union 47 approved joining the new district last November.

The effects of this change cannot be predicted, of course, but one thing that is known is that joining RSU 1 effectively ended school choice for the four former Union 47 towns.  About 50 high school students in those towns chose to attend a school other than Morse High School in Bath, but that choice will no longer exist for families in those towns.  Chalk up one more win for big government and the public school establishment.

Despite the lack of reporting about it, the launching of RSU 1 is an important milestone in the history of Maine schools.  The state begins today an experiment in larger regional school districts, one that will spread statewide as consolidation efforts continue. The loss of school choice is one known result of these efforts, but the other outcomes are largely unknown.  For years now, Maine has tried reform after reform - Learning Results, local assessment, Essential Programs and Services, LD 1, Laptops - and we have yet to see any meaningful gain in student achievement. Will consolidation be any different?

Time will tell...