Expect More Cuts to Schools and Municipalities to Pay for Income Tax Cuts for the Rich

The state is facing a $756 million structural budget gap over the next two years, according to a report released last month by the state’s budget office. That gap would be half as big if it weren’t for fiscally irresponsible tax and budget policies enacted by state lawmakers over the past two years. The two-year cost of the income and estate tax cuts passed by lawmakers and signed by the governor in 2011 was $378 million.

How will lawmakers close the budget gap? The budget office report and public comments by Commissioner Sawin Millett provide some clues. Expect lawmakers to continue withholding money required by law to go to schools, local communities, and low- and middle-income property taxpayers. As MECEP showed in a recent report, this will continue to drive up property taxes on the poor and the middle class and hurt our ability to invest in Maine’s future.

A recent Bangor Daily News article suggested that municipalities and property taxpayers, by extension, should expect to be shortchanged yet again:

The document also assumes the state will restore the portion of revenue it shares with municipalities to the legally required 5 percent of sales and income tax collections, which is another unlikely scenario, Millett said.

The report from the budget office suggests that schools, too, should expect to be shortchanged:

“It is important to stress that this forecast must be developed using current law as its basis. Therefore the statute obligating the state to pay 55% of the cost of K-12 education is the basis for expenditures used in this forecast although the state’s fiscal situation renders attainment of that level unlikely, with a proposal to delay full 55% funding probable.” (Emphasis mine)

The state’s “fiscal situation” is the responsibility of lawmakers. Half the reason for our poor fiscal situation is the misplaced priorities of the 125th Legislature. According to the same report from the budget office, state funding for K-12 education needs to increase by $119 million in FY 2014 to comply with the law and will of the voters, who decided at the ballot box eight years ago that the state must cover 55% of the cost of educating Maine kids. Meanwhile, the cost in FY 2014 of the recent income and estate tax cuts that mostly benefit the wealthy is $200 million.

It’s time for Maine’s lawmakers to get their priorities straight. Stop protecting the interests of the rich at the expense of everyone else. It’s going to hurt us all for decades to come as Maine falls behind states that are doing what is necessary for a strong economy and job creation.

They are investing in their kids, in education, in the skills of their workers, in transportation and other infrastructure, and in research and development. How do they afford it? By making sure everyone pays their fair share.

We are blowing enormous holes in our budget and putting our future prosperity at risk with tax cuts that mostly benefit the wealthiest Mainers. It’s a losing strategy.