Lawmakers reneged on vow to cut spending
May 12, 2008
Author: J. Scott Moody, Kennebec Journal op ed
It nearly passed because Maine taxpayers were tired of the same old promises to reform the tax code and lower Maine's tax burden. When the Taxpayer Bill of Rights received 46 percent of the votes, politicians took notice, responding that they heard the voters' message loud and clear and once again promised to cut spending and lower taxes.
As we just witnessed with this legislative session, the politicians' resolve melted into increased spending and increased taxes.
The Taxpayer Bill of Rights would have limited spending increases to the rate of inflation plus population growth. If the current two-year Maine budget followed those rules, it would have increased by $444 million instead of the actual increase of $487 million. The additional $43 million in spending approved by the Maine Legislature would have been subject to a vote of the people.
In the same way, the recent $50 million tax increase on health insurance claims, beer, wine, soda and other beverages to pay for the failed Dirigo Health plan would have to have been approved not only by the Maine Legislature, but by a vote of the Maine people.
What are the odds that this $50 million Tax Day tax increase -- it was passed on April 15 -- would be approved if put to a vote by the people of Maine?
While the Taxpayer Bill of Rights was defeated in 2006, we are still mired in the same fundamental problem: The Legislature spends more money than Maine taxpayers can afford.
Unfortunately, before this two-year budget is over, the $487 million in state spending increases will continue to create additional budget shortfalls because the tax revenue estimates did not reflect the full impact of an economic slowdown. Nor did they reflect the negative pressure that cross-state-border shopping has on sales tax revenues. In addition to the state's tax revenues being lower than anticipated, state spending actually will increase because more people will qualify for state aid. It's a disastrous combination.
Tax revenues are higher than the last budget cycle, but the spending has grown even faster.
Even though most program budgets are higher, the Legislature will have to reduce that growth and face protests about the unpopular "cuts" from vocal, organized groups who benefit from that particular budget item.
The Maine Legislature will make more cuts in the growth of programs, may enact some actual spending cuts, create more tax revenues, raise a few more fees, try some accounting tricks, raid more funds ... and continue the confused scurrying to piece together more emergency patches to a budget that's still overstuffed with too much spending. It's a scene reminiscent of the "Keystone Cops," except the pie-in-the-face is thrown at the Maine taxpayers.
The Taxpayer Bill of Rights would have saved a mountain of whipped cream.
J. Scott Moody is vice president of policy and chief economist at the Maine Heritage Policy Center. E-mail at jsmoody@mainepolicy.org
http://kennebecjournal.mainetoday.com/view/columns/5023830.html
