Maine: state of deception

By LANCE TAPLEY  |  August 27, 2008

Can anyone “produce” a surplus without raising taxes? By being extremely conservative in its tax-receipts forecast, the Revenue Forecasting Committee could have “produced” a big shortfall expected in the budget. Then the Appropriations Committee would be required to make cuts — as it did — to balance the budget with the forecast. And then the tax money that came in beyond the forecast amount would be a surplus.

Was the committee under political pressure to low-ball revenue expectations? Acting state tax assessor Jerome Gerard, its chairman, says no: the committee aims “to be right on the money” (which contrasts with Finance Commissioner Wyke’s assessment of the committee’s “conservative” approach). The surplus resulted, Gerard says, because forecasting tax revenue is “not an exact science.”

Regardless of how the surplus came about, regardless of whether it was dealt with deceptively, regardless of the perhaps-unnecessary social-service cuts, Health and Human Services Commissioner Brenda Harvey says conversations among state officials and service providers are not about the past; they are “worries about winter” because of hikes in energy costs. “There’s only so much money” — meaning government funds to help vulnerable people.

With that last remark, she puts her finger inadvertently on a motivation of state leaders to keep important financial moves away from public scrutiny.

The fundamental dilemma of state government is the perennial lack of revenues to cover state expenditures, despite cut after cut, year after year, of state services. And Maine’s dominant Democratic officeholders share the traditional Republican position of refusing to consider an increase in the state’s two major sources of revenue, sales and income taxes.

Baldacci, in fact, has recently begun talking about reducing the income tax. Unless another tax is increased, this would require more cuts in services, despite the strain on disadvantaged people expected this coming winter and beyond. While it is widely acknowledged that America is in a new Gilded Age — the rich are enjoying historically high income and very low taxes — increasing taxes on them or reducing the state’s annual $1.5 billion in tax breaks to them and to the (mostly out-of-state) corporations they own are options that are simply not on the table. Overtly, cutting spending is all that is.

But doctors and the kind of people on hospital boards are big campaign contributors to both parties, and satisfying a lobbying group is always on the table, even if the deed is done under the table. Taxing regular people in a sneaky manner is business as usual, too, when it’s done for a powerful lobby or a party constituency (see sidebar, “Two Other Backroom Deals”).

Jon Bartholomew, acting state director of Common Cause, the nonpartisan good-government group, fears that, by the evidence of the past legislative session, “We’re moving back toward the smoke-filled rooms” of governmental decision-making. He adds: “Government only effectively serves the public when the public knows what the government is doing.”

Lance Tapley can be reached at ltapley@roadrunner.com.

 

Two other backroom deals
Just before the Legislature’s adjournment this spring, with no public hearing and little debate, Democratic Governor John Baldacci and the Democratic majority rammed through a bill slapping new taxes on beer, wine, and soda pop. They did it to finance the struggling Dirigo Health Plan. The move upset Republicans and the business community. They launched a people’s-veto campaign to force a referendum on the taxes, which has a good chance of success come November.

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