At coffee shops and family gatherings across America, there is a spirited debate about the appropriate size and cost of government at every level. We all agree that public roads must be plowed, our children educated, and the country defended. However, should government also provide, for example, health care for able-bodied 19 and 20-year-olds, and buy laptop computers for public middle school students?
Big government is expensive. Property, sales and income taxes pay for government programs and services. Struggling through the worst recession in 70 years, most American families cannot afford to give up more of their hard-earned money in taxes to fund what many believe is government overspending.
In Augusta, the Maine State Legislature is scheduled to adjourn in less than three weeks. Before then, it is required by law to pass a balanced budget where state spending equals projected tax collections over the next two years from mid-2013 through mid-2015. Right now, spending is calculated to exceed tax revenues by $800 million.
In January, Republican Gov. Paul LePage submitted to the Legislature a proposed balanced budget which includes spending reductions but no tax increases. Last week, the Democratic majority in the Legislature responded with a planned $400 million tax hike, the largest in Maine history, to help close the budget shortfall. In addition to rolling back their own bipartisan income tax cuts passed in 2011, the legislative majority now proposes increasing sales, meals, tobacco and other taxes rather than reduce spending.
The final decision by our elected officials will impact every Maine family and small business. Will we Mainers once again lose more of our paychecks to fund government overspending? Or, will we be allowed to keep more of what we earn because government is able to control its appetite to spend?
As this critically important debate progresses, I suggest all parties consider the accompanying graphic. It shows that each year Maine state government already spends the 16th highest dollar amount per resident on government services as compared to all 50 states. Maine also spends more per person than the average of other rural states. To fund that overspending, Mainers pay the 9th highest tax burden in the country. In other words, we pay the 9th highest share of our mostly low-wage incomes for state and local taxes.
By any objective measure, Augusta has been overspending for a long time. That’s why it lurches from budget crisis to budget crisis nearly every year. In past years, the governor’s office and the Legislature relied on accounting gimmicks to “balance the books.” Hundreds of millions of one-time federal stimulus dollars were used to plug budget holes and maintain unsustainable programs, like our Medicaid welfare program, called MaineCare. Thirteen thousand state employees were sent home without pay for 10 or so days during the year to “save” money. Maine hospitals were not fully paid for health care services provided to our huge Medicaid population, resulting in today’s enormous $484 million hospital debt.
During my term as state treasurer, I and other government officials with real- world business experience criticized the use of gimmicks to balance the state budget. At least for now, it appears that those financially imprudent practices are behind us.
Going forward, it would hurt Maine families if the State Legislature raises taxes to help balance the budget. For the 2000-10 period, the nonpartisan Tax Foundation calculated that the ten states with the lowest tax burdens had, on average, greater population, employment, and personal income growth than the ten highest taxed states. For many years, Maine has been among the highest taxed states. For too long, our deserving families have suffered low wages and slow income growth because Maine’s high taxes, in part, drive away business investment and jobs.
Right now, our state legislators have an opportunity to help struggling Maine families. Instead of pulling more tax dollars from the pockets of hard-working Mainers, the state Legislature should stop overspending, live within its means, and right-size our unaffordable state government.
Lower, not higher, taxes will help attract business investment and more jobs. Making it easier and less expensive to live and run a business in Maine will lead to more financial security and better lives for our citizens. The resulting economic growth will generate the tax revenues we need to take care of the most disadvantaged among us. Following this common sense path will be good for Maine.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs. Follow Bruce on Facebook at www.facebook.com/BrucePoliquin and on Twitter at www.twitter.com/Brucepoliquin.