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Governor's Weekly Address: We cannot tax our way to recovery

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Audio of the Governor’s Weekly Message can be found here.

Hello. This is Governor Paul LePage.

Maine is in the middle of a cold spell. With rising prices for heating oil, Mainers are spending more to fill their tanks to keep warm this winter.  Gas, groceries, and the basic necessities are increasing forcing Maine families to manage tight budgets.

Furthermore, the federal government takes more from your paycheck. The average family is paying 1,000 dollars more in payroll taxes.

I believe Mainers should be able to keep more of their hard-eared money.  That’s why I have lowered taxes for the majority of Mainers. 70,000 low-income Mainers will not pay income tax this year, and families making an average income of $48,000 will have about $300 more for their budget.

We simply cannot tax our way to recovery. We cannot continue to increase taxes to fix our welfare problem. And we cannot spend money we do not have.

So-called stimulus dollars from the federal government, or what I consider federal welfare, are gone. Matching funds are being cut. Maine stands to lose $40 million in federal funding for Medicaid in the next two years.

However, we must find a way to pay our bills. We must protect the most vulnerable. The bottom line is we must be frugal with tax dollars and get the best value from the limited resources.

Over the past few weeks, you’ve heard much from the loyal opposition about what they don’t like about my budget proposal, but let me be clear: you haven’t heard any solutions from them.

One of the more challenging pieces to balance the budget is the temporary elimination of revenue sharing to communities.

Unfortunately, information distributed by the Maine Municipal Association is not accurate and is completely self-serving. MMA claims that municipalities will lose 284 million over the next two years. What they don’t tell you is in previous years revenue sharing has never been fully funded, dating back to my predecessor. While I would like to share more money with towns and cities, we simply do not have it.

In an effort to provide Mainers with an accurate picture of the impact to community budgets, we’ve done an analysis. For example, the City of Portland’s budget last year was $291 million. Reducing all of its revenue sharing funding based on past practices amounts to $6 million. This equals 2 percent of the overall city budget.

Last year, Bangor’s budget was about $144 million. The state provided $3.5 million – or 3 percent of its budget.

Waterville’s share of state revenue is about 4 percent of its total budget of nearly $41 million. As Mayor of Waterville for 8 years, I was able to balance budgets while reducing property taxes. Working together with a Democratic City Council, I was able to reduce spending and lower taxes. A temporary loss in revenue sharing does not mean that property taxes will automatically go up. That is a local choice.

It is not impossible for local government to save money, consolidate services and identify priorities. If revenue sharing makes up as little as 2 to 4 percent of community budgets, it is reasonable to request local officials to find alternatives. These are difficult times, and we must work together to move Maine forward.

There are many towns and cities across our state that can consolidate services and save money. For instance, Fairfield, Oakland, Waterville and Winslow all are within a five-mile radius. Each has their own fire and police, schools and public works personnel, along with many other duplicative services. Combined, these communities are approximately the size of Lewiston.

There are ways for communities to work together. However, home rule or choosing to go at it alone is an expensive choice.

Unfortunately, I do not have many popular options when it comes to balancing a budget. The recent downgrade from Fitch was based primarily on Maine’s growing welfare costs and not paying its bills. The federal government compounds our financial challenges with little flexibility and less funding every year.

Whether it’s the state or federal budget, it’s obvious: times are tough and hard choices need to be made. Until the Legislature makes long-term fixes to welfare in our state, our financial problems will continue.

My proposal isn’t perfect, but I am confident it will get us through this crisis.

Thank you for listening.

About Steve Robinson

Steve Robinson the editor of The Maine Wire. A native of Dexter, Maine, Robinson is a graduate of Bowdoin College.

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