Maine’s budget blow-out would be worse if not for LePage pension reform

Once again, like a recurring nightmare, another gaping hole has been ripped in the state budget. And once again, it’s the same hungry beast ripping the biggest budgetary holes in the state’s checkbook: Medicaid, the profoundly broken and dysfunctional medical welfare program we call MaineCare.

The estimated Medicaid fiscal gap is approximately $78 million, which must be resolved by the time the Legislature adjourns in April.

The nightmare gets worse. Another $40 million budget holemust be filled somehow. That $40 million total was booked as “revenue” when the Democrat-written budget was passed last year over a veto by Gov. Paul LePage.

All told, the shortfall we legislators must address will easily exceed $100 million, maybe $150 million. And remember, this comes after Maine’s sales tax was raised 10 percent last year, and the meals and lodging tax was jacked up 14 percent. Options to plug these holes are few — another tax increase, program cuts, a budget curtailment order or deeper cuts in municipal revenue sharing, which generally translates to higher property taxes.

Obviously, these are serious problems, but they would be worse — much worse — were it not for public pension reforms enacted in 2011.

For years, Democrats and the government employees’ unions who fund their campaigns turned a blind eye to the spiraling costs of the pension program, which threatened to eventually swamp the entire budget. Past legislatures brought additional groups into the program without funding them, borrowed from the fund, enhanced payouts, postponed debt payments and hoped for the best.

So when LePage took office three years ago, he found a ticking time bomb on his desk, left there by the Baldacci administration and decades of one-party liberal Democratic governance. Liberal politicians made promises they couldn’t keep to the union bosses and handed the spiraling bill to taxpayers. Someone had to be the adult in the room and defuse the pension debt bomb.

LePage and the Republican-led Legislature stepped up to the plate while Democrats hid under their desks, and the union bosses howled in raucous indignation.

The unfunded liability had grown to $4.1 billion, and the annual cost to taxpayers would have been $477 million in 2012-2013 alone. By 2028, the taxpayer liability would have roughly doubled to nearly $1 billion for the state’s two-year budget. Couple that with the out-of-control, unpredictable costs to feed the Medicaid beast, and the entire budget would be cannibalized.

Doing nothing would have put Maine on the same path to insolvency that landed the city of Detroit, Mich., in bankruptcy court.

For decades, Maine Democrats had been doing little.

With the able assistance and support of state Treasurer Bruce Poliquin, LePage crafted a reform package that called for sensible sacrifices from state workers. The retirement age was increasedfrom 62 to 65 for non-vested employees and new hires. The plan also included a three-year freeze on cost of living adjustments (COLAs) through 2014 and permanently capped the cost of living adjustment at 3 percent for the first $20,000, as opposed to the previous 4 percent maximum with no ceiling.

These reasonable measures reduced the pension debt by a whopping $1.7 billion long-term, or about 40 percent of the unfunded liability, according to the Maine Heritage Policy Center.

The governor’s first budget in 2011 incorporated these pension reforms and saved Maine taxpayers $337 million. Right now, we are saving $330 million in this two-year budget, and savings of that magnitude will continue through 2028.

LePage and the majority-GOP Legislature led the way and enacted the reforms with grudging support from many Democrats, though it’s fair to say they were dragged kicking and screaming across the finish line on pension reform. Predictably, the public-sector unions sued over the COLA changes, and it lost.

Our immediate budget nightmare in Augusta is made even scarier by the unwillingness of Democratic leaders in the Legislature to face fiscal reality. They seem to think they can spend the same tax dollar multiple times, and they continue to make promises they can’t keep without blowing more holes in the budget. Just on Tuesday, the state employees’ unions swamped the Appropriations Committee room to demand a $6 million raise for state employees.

They do this even as 3,100 severely disabled Mainers languish on Medicaid wait lists, and our state faces a massive budget shortfall. Until the unholy alliance of Democratic politicians and government employee union bosses is scourged from our political landscape, Maine taxpayers will never escape the nightmare of budget blow-outs.

Lawrence E. Lockman, R–Amherst, represents District 30 in the Maine House of Representatives, and serves on the Labor, Commerce, Research & Economic Development Committee. He may be reached at larrylockman@rivah.net.

A version of this op-ed originally appeared at the Bangor Daily News.