All Maine Matters

February 2006



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Response to Baldacci's State of the State Address
By Rep. David Bowles

Good afternoon, and thank you all for coming. I’m Dave Bowles, House Republican Leader. With me here today are Senate Republican leaders Paul Davis and Carol Weston, and Josh Tardy, the assistant leader in the House. We will each be discussing one of four topics that are matters of concern for all Mainers – taxes and spending, energy policy, economic development and job creation, and finally the cost of health insurance. After our short presentations, we will welcome your questions.

We did not ask you here today to respond directly to the governor’s State of the State address. We instead wish to lay out parts of our plan for Maine’s future, and what the state would look like under Republican leadership. We’re putting forth this plan because we believe we need a comprehensive, holistic approach to problem-solving, as opposed to the reactionary policies we have cobbled together in the past. Is in trouble on many front, and we’re all in this together. This is a ship taking on water, and we all need to man the pumps.

Maine is not safe, strong and secure, as we heard last night. Today, one third of our population cannot make ends meet. We still have the highest tax burden in the country. Our property taxes, relative to income, are the highest in the nation, posing a huge threat to senior citizens and others on fixed incomes. We have the highest percentage of our population on Medicaid – higher than any other state. Health insurance is becoming unaffordable for companies and individuals alike.

Our electric utility rates are among the highest in the country, and we have no comprehensive energy plan. Our economic development is lagging the country, and we’re not creating enough jobs. I do not call that strong. I do not call that secure.”

We’re concerned that our tax burden, our cost of health insurance, and the cost of energy are making Maine unaffordable for working class families and the middle class. We have submitted bills for years to correct some blatant policy mistakes, but we have had few successes.

That’s really a shame, because there are common sense solutions to many of these problems. We know, because they have worked in many other states. Maine has been going it alone on many key issues. But we’ve been going in the wrong direction. Now is the time for a frank discussion on these major issues. We are looking the people of Maine straight in the eye, and we’re saying Maine is not working. We need to set a new course for the state, because right now our ship of state is headed for the rocky coast.

Now, onto our topics.

I’d like to begin with taxes and spending. We’re not here just to complain once again about our tax burden. We all know by now that it is the highest in the country and has been for years. And it keeps getting worse.

We know from a recent study by the Office of Fiscal and Program Review that taxes and fees have gone up by more than $900 million since the governor took office. He can say that they didn’t come from some broad-based tax, but the people of Maine have to pay these taxes all the same. It doesn’t matter if you take the money out of the left pocket or the right pocket, it all comes out of the same pair of pants.

There seems to be an endless appetite for more taxes to fund an endless string of programs. But the root problem is not taxes themselves. It is spending. If we can get spending under control, lower taxes will follow. The poor results of LD 1 – the governor’s tax reform plan – clearly demonstrates that we need something stronger to restrain spending and keep Maine affordable for our hard-working people.

For many years, Republicans have promoted the idea of an amendment to the Maine Constitution to limit state budget increases to inflation plus population growth. We believe that is the only reliable way to restore financial stability to state government. It is impossible to deal with taxes until we control spending. And so we will continue to call for this Constitutional amendment for as long as it takes to pass it. It is an essential tool and the people of Maine need to know that real tax relief is coming. It may take a while - it probably will require a Republican Legislature – but we will not be deterred from pursuing this goal.

There would be no need to make cuts to existing programs if they are operating efficiently and providing the service for which they were created. We could establish current budget levels as a sort of baseline and go from there. And by living within the constraints of inflation and population growth , state spending could grow reasonably at a rate our people could afford.

The Maine Revenue Forecasting Committee has projected a budget surplus this year of $164 million. We believe it is time to pursue modest tax relief by using some of this money to bring Maine in line with the rest of the nation, while using most of the surplus ti built up fiscal reserves or retire debt. This is not a time to embark upon new initiatives which would inevitably add additional costs onto Maine taxpayers.

In order to lower the Maine state tax burden, we should dedicate some of the surplus to bring the Maine state income code in line with the federal tax code for tax years 2006 and 2007. The changes in the tax code would eliminate the marriage penalty and eliminate the estate tax – the so-called “death tax.”

The tax reductions at the federal level have created a strong economy in much of the country. But Maine has not aligned its tax code with all the federal changes, and we are paying the price.

We really have no choice but to control spending and taxation. Our high tax burden is impeding economic activity and job creation. It is keeping Maine incomes much lower than those in neighboring states. And it is putting us at a huge disadvantage is an emerging global economy.

Representative David Bowles is the House Minority Leader.

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