Back in 1989, Gov. Jock McKernan faced a post-economic boom budget gap. One year after cutting rebate checks totaling $42 million to happy taxpayers for the holidays, the state’s shortfall started to spiral as the American economy went south.
Why? Says The New York Times from Dec. 1989: “Sluggish sales of motor vehicles and building supplies have been cited as the chief reasons.” If this sounds familiar, it is. The flaw of Maine’s budgeting — its susceptibility to volatility — hasn’t changed.
Gov. John Baldacci is dealing with another deficit, about $570 million. The governor has proposed cuts to education and social services, planned furlough days, lightened tax breaks and emptying the state’s piggy bank to cope.
Baldacci has also proposed a streamlining commission to recover another $37 million from wherever it can find it. Republicans criticized the overall plan because it lacks “structural” changes to affect the budget in the long-term. A streamlining commission, says the GOP, is just a placeholder.
Yet a placeholder is better than unpredictable savings, which is the problem with the “structural change” espoused by Republicans. Time after time, a lack of political or popular will has spiked such sweeping changes, despite their promise of savings or greater efficiency.
This is true of school district consolidation, which is up for repeal later this year. This is true about consolidation of natural resource agencies, which has failed to materialize. Locally, we could wax poetic about the trials and tribulations of sharing services between the cities of Lewiston and Auburn.
But maybe the best example of the failings of “structural change” is tax reform. Maine hasn’t yet altered its tax system, despite being stung by it in the past and again this year. If one so-calledstructural change is overdue, it is insulating Maine’s tax revenue from bubbles and bursts.
So where is the political support for it? Not with the Republicans, who largely oppose this year’s tax reform bill, LD 1088. And not with Gov. Baldacci, despite his cutting of millions from the budget to cope with an absolute economic meltdown.
It would be folly to place hope in structural changes in government with its recent track record; plus, it only deals with half the issue. Maine must address where money is spent, of course, but it cannot ignore the flaws inherent in how it raises money, too.
Tax reform would do that. Yes, it would do some unpopular things — raise taxes on lodging, amusements and other now-exempt services, for example — but it would correct a long-standing problem with Maine’s tax system. It is too dependent on homes and cars.
In this economy, with foreclosures rampant and automakers collapsing, these are sectors Maine just cannot rely upon. A wider tax base is not only warranted, but seems eminently sensible.
This was just as true in 1989 as it is today.
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