Prioritizing how Maine spends is road to tax relief

Over the past 18 months, we have read a number of reports focusing on Maine’s economy. Two were of particular value, as they outlined ways which Maine could benefit by applying new economic development strategies.

The first, “Charting Maine’s Future” by the Brookings Institution, and commissioned by GrowSmart Maine, gained widespread notoriety and generated tremendous discussion across the state. The second, the Final Report on Economic Development Programs in Maine by the Office of Program Evaluation and Government Accountability (OPEGA), a watchdog group set up by the Legislature.

The OPEGA report suggested that more “meaningful, statewide coordination efforts” were needed to “facilitate understanding of effective management of the state’s entire portfolio of economic development programs.” According to the Maine Development Foundation, the combined cost of these programs is estimated at between $200 million and $250 million annually. Both reports have sparked debate in Augusta.

Their findings are now about to take on new meaning. Their ideas have culminated in two major initiatives which, if passed by the Legislature, could have a profound impact on how state government performs into the next decade and beyond. Each offers a unique perspective into the state problems and potential solutions to the business, economic and social needs of Maine’s people.

The Brookings report is the first of these change agents. It proposes savings through “government efficiencies and consolidation.” Indeed, it was the catalyst in the movement to transform schools and county jails.

Moreover, the Brookings report called for tax reform, an idea that inspired a major undertaking by the Taxation Committee last year. For good or ill, this tax reform plan went down to defeat last June.

A third Brookings recommendation was to “develop a blueprint for securing perhaps $60 million to $100 million annually in efficiency and structural savings within government.” Intrigued by these figures, the Legislature created the Committee on Future Maine Prosperity in hopes of identifying and realizing these savings. Combining the experience and leadership qualities of a bipartisan group of 16 senators and representatives, this committee managed to pass a unanimous report, issued in late January.

Their orders from the Legislature were to develop a plan to achieve “sustainable prosperity” in Maine, while recommending legislative action on myriad topics, ranging from energy policy and health insurance to transportation and preserving Maine’s “quality of place.” One goal is to lower income tax from the present top rate of 8.5 percent to a top level of 4.5 percent.

Another important recommendation was creating a Government Efficiency Commission, comprised of nine non-legislators who are experts in business, finance or government. This independent group would identify savings to reduce government expenditures by $75 million per-year. The cost-cutting plan is to be presented to the Legislature by January 2009 for a vote. Savings generated by these reductions will be used to lower the income tax burden on our citizens. This is a tremendous step in the right direction and requires positive support from the Legislature.

OPEGA’s report could also lead to savings or efficiencies. According to OPEGA, clients receiving economic and community development assistance will undergo periodic assessments with new accountability standards.

Our committee, Business, Research and Economic Development, consistently advocates for greater accountability and the improvement of public trust. We are now working to establish an “economic development portfolio coordinator,” who would submit an annual comprehensive evaluation of state investments in economic development.

This process will generate “publicly accessible, understandable information about the programs, including relevant, objective and verifiable data on program costs and performance.” It is imperative that we be the best stewards possible when dealing with taxpayer dollars, a practice even more significant during times of scarce resources.

As bleak as revenue forecasts continue to be, forward-looking proposals like these are essential for the economic vitality of Maine. A $95 million shortfall in state revenues, coupled with the governor’s pledge to avoid tax increases, makes these legislative initiatives even more important.

We may just be entering a period in our history where economic conditions, along with the prosperity committee and the new economic portfolio coordinator, will move policymakers to accomplish legitimate savings and tax reform.

As a result of these changes, we hope Maine will establish spending priorities to provide sustainable tax relief. It appears separate agents for change are finding their plans and ideas have become the focus in the road map toward meeting these goals.

We look forward to these developments, and are excited and optimistic about this opportunity to achieve the kind of progress Maine citizens expect and deserve.

Rep. Mike Beaulieu, R-Auburn, [email protected], and Mark Samson, D-Lewiston/Auburn, markmariesamson@ verizon.net, serve on the Legislature’s Business, Research and Economic Development Committee.