All Maine Matters

August 2006



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All Maine Matters

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Vol. 1, No. 8      August 2006 FREE

Buying the Blaine House (With Your Money)
By Reps. Henry Joy and John Churchill

Is Governor John Baldacci using our tax dollars to buy his reelection? That would certainly appear to be the case.
The governor recently signed into law two bills that will immensely increase the tax burden on the people of Maine for years to come. The benefits will flow to special interest groups, who undoubtedly will return the favor on Election Day.

Simply stated, the governor is using our tax money to win four more years in the Blaine House. His lavish vote-buying schemes could hardly come at a worse time. Mainers already shoulder the heaviest tax burden in the country. Our state debts and unfunded liabilities exceed $5.3 billion. Our job base is shrinking. And we will enter the next budget cycle with a projected shortfall of $500 million.

Under these grim circumstances, the governor should be exercising utmost fiscal discipline. But plagued by dismal approval ratings, he is playing fast and loose with our financial future. His buying of votes is so naked and obvious that even newspaper editorials have denounced it.

The Portland Press Herald ran an editorial on June 5th under the headline “Police, firefighter benefit an election-year giveaway.” After explaining how the plan works (more on that later), the editors summed it up thusly: “It’s a blatant political move in a campaign year. Maine taxpayers will be paying for it for decades.”

The Morning Sentinel, which serves much of Kennebec, Waldo, Somerset and Franklin counties, did not mince words. Its lead editorial on June 1 was entitled “Buying votes for the governor with our tax dollars.” The authors made their objections clear. “By seeking votes through the state budget,” they wrote, “the governor and his allies in the State House who helped pass this legislation – many of whom are running for reelection themselves – feed the public’s cynicism about politics and politicians.”

The Lewiston Sun Journal weighed in on June 3. Its editorial was entitled “Two new perks for public workers will cost us plenty.” “The Legislature, with Democrats in control, took on two new financial obligations that seem certain to grow,” the editors wrote. The editorial explained the new health care benefits for public safety workers, noting that they will cost the state $1.3 million in 2008 and $3.1 million in 2009. “But unless something miraculous happens, those costs will rapidly increase. Thus, the state has incurred another costly long-term obligation.”

Needless to say, it is extremely rare when three major daily Maine newspapers all attack the governor on their editorial pages in the same week. Baldacci usually gets a pass from a friendly media.

Under one of the new laws, minimum salaries for Maine’s public school teachers will be set at $30,000. The $30,000 figure first surfaced in the governor’s State of the State address, last January. He later submitted legislation to bring the plan to fruition. Admittedly, it was a shrewd political move. It had the dual purpose of cementing the support of the teachers union while casting those who oppose the scheme in a bad light – as “anti-teacher” or “anti-education.”

As legislators examined the plan, we immediately saw trouble. The governor’s proposal included only about $4 million to bring all teachers making less than $30,000 up to that level. It was one-time money, for one year. After that, the money disappears.
For all the years that follow, the extra cost will have to be covered by local school districts – in effect, the people who pay property taxes. With Maine’s property tax burden already the heaviest in the country, the idea of forcing taxes even higher struck Republicans as unconscionable.

Moreover, the property tax increase will not be $4 million. Instead, it will total between $50 million and $75 million per year, as calculated by the Maine School Management Association. The discrepancy is the projected cost of the “ratchet effect.”

If starting teachers make $30,000, the salaries of more experienced teachers will rise to avoid “wage compression.” A teacher with 10 years of classroom experience who makes $35,000 might demand $40,000 to maintain a respectable edge over a rookie. Multiply that example by Maine’s 15,000 active teachers and you begin talking real money. The governor has basically pushed an unfunded mandate on every school district in the state and eviscerated local control. That’s why the Maine Municipal Association so vigorously opposed this legislation.

All Maine taxpayers will suffer from another upshot of the plan. Teachers’ pensions are based on their three highest earning years. Ratcheting up all salaries translates to higher retirement benefits. But the Maine State Retirement System, which pays out those pensions, already has an unfunded liability of $3.1 billion. That’s right – $3.1 billion. By the time that debt is retired, in 2028, it will cost us $7.9 billion, including interest. The impact of higher benefit payments for higher-paid teachers will make it harder to keep the retirement system solvent.

The second new law will pay 45 percent of the health insurance premiums for retired police officers and firefighters until they hit age 65, when Medicare takes over. Traditionally, their benefits have come through collective bargaining agreements with the municipalities where they work. Now they will be drawing benefits from the state’s Retiree Health Insurance Fund for retired teachers and state workers.

This health insurance fund itself has an unfunded liability of $1.2 billion, and the cost of the new benefits is expected to grow dramatically in the future. Taxpayers who are hard-pressed to afford health insurance for themselves will be paying even higher taxes to keep the state system afloat.

John Baldacci may not care that he is saddling us with heavier taxation. The worst fiscal havoc will not strike the state until he is gone, even if he should win a second term. In effect, he will leave a financial time bomb for future governors to deal with. His actions are irresponsible and an abrogation of good faith governing. They are also a slap in the face to the maxed-out taxpayers of Maine.

Rep. Henry Joy (R-Crystal), a retired educator, serves on the Legislature’s Natural Resources Committee. Rep. John Churchill (R-Washburn), retired from the Maine State Police, serves on the Criminal Justice and Public Safety Committee

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