Tax cuts will worsen, not fix budget

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If Democrats had proposed spending last year that cost $170 million – say, to meet the 55 percent education funding law, or to keep revenue sharing flowing to towns and cities and boost property tax relief – they’d have been greeted with derision, not only from Republicans, but from their own party. It was obvious, with anemic revenue growth and the loss of federal stimulus money, that this was not the time to boost state spending.

Newly ascendant Republicans, however, not only proposed but enacted a new $170 million program. Not only that, but the cost balloons to $530 million in the 2013-14 biennium, something it’s hard to even get your head around.

The program Republicans enacted is called tax cuts, and has exactly the same effect on the budget as if we’d raised spending by the same amount. Fortunately, most of the tax cuts only take effect for the 2012 tax year, so there’s still time for second thoughts.

Now switch to the Appropriations Committee room a week ago Friday, where Gov. Paul LePage made a repeat unscheduled appearance. Governors almost never attend legislative committee sessions; two visits are unprecedented. The committee had just received a letter from the U.S. Department of Health and Human Services saying LePage’s proposed Medicaid cuts, part of $221 million in reductions that eliminate health care for 65,000 people, violate federal law, and Maine would not receive a waiver to make them.

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The letter reiterated the Obama administration’s consistent policy that states can only receive waivers for experiments that expand Medicaid coverage, not reduce it. The issue was settled last year when Arizona tried it, and that’s not going to change for Paul LePage.

Nevertheless, the governor was not in the Appropriations room to present a new plan, but to hammer the committee for not adopting his original one. It appears LePage is one of those people for whom the saying, “What part of no don’t you understand?” was coined.

DHHS Commissioner Mary Mayhew told the committee she would “work with our congressional delegation” to get the waivers. It won’t happen. She’d be better advised to press Sens. Olympia Snowe and Susan Collins to advocate for transitional aid for Medicaid, which will be expanded beyond Maine’s current enrollment when the Affordable Care Act takes full effect on Jan. 1, 2014. The ACA expands both public and employer-paid insurance to near the goal of universal coverage. It’s not going away no matter who’s elected in November.

Collins and Snowe were influential in getting state aid into the original stimulus bill, and even got a six-month extension. A repeat appropriation is a long shot, but has a better chance than LePage’s doomed campaign.

That’s for the future. For now, it’s high time to start talking about how to craft a supplemental budget before the Legislature adjourns in April.

When the mammoth tax cuts were approved last June, Finance Commissioner Sawin Millett assured Appropriations that the budget was balanced. That was a whopper, as those who recall his performance as John McKernan’s finance chief in the 1990s might have anticipated.

It might have occurred to everyone that, with economic growth still anemic, this might not be the best time for “the largest tax cut in Maine history,” as Republicans proudly call it. The budget balanced on paper only because DHHS spending was drastically underestimated, after Mayhew conveniently fired all the appointees from previous administrations who could have pointed that out. Enrollment growth accounts for 3 percent of the alleged $221 million shortfall. The rest is, well, funny numbers.

Fortunately, though DHHS’ memory bank is depleted, there are still those a step down the hierarchy who can find ways to make reductions, and gain additional federal aid, rather than gutting the Medicaid rolls just before they’re expanded again.

And yes, the tax cuts have to be on the table. Republicans won’t have to give them all up, but they’ll have to bargain. Trying to carve the balance from other programs won’t happen either. Schools are already cutting programs and laying off teachers. Far from reaching the required 55 percent, state aid has declined to its lowest level in two decades. And the rest of state government has been cutting staff since John Baldacci’s last term.

This knowledge forms the undercurrent at the State House, and no amount of bullying is going to change that. House Speaker Robert Nutting told LePage last year that he doesn’t understand the legislative process, and LePage hasn’t learned much since.

We can get through this. But first we must lower the volume, and start listening to each other.

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