Gov. Mills delivered her state of the budget address Tuesday with a big dose of optimism.
Even when she was cataloging the hard times Mainers have faced over the last year – especially those caused by the coronavirus pandemic and its economic fallout – the governor said that the end was in sight and perseverance would get us through.
There is good reason to be hopeful: The collapse in state revenues was not as severe as forecasters had predicted, in large part because of the money spent by the federal government to support unemployed workers and keep small businesses afloat.
And with two effective vaccines being distributed across the nation, and a third on the way, we can look forward to a post-COVID economic rebound in the second half of the year.
But despite the governor’s optimistic tone, the budget she has proposed looks like she is bracing for hard times ahead.
The budget is balanced, as the state constitution requires. It doesn’t raise taxes and it adds to – rather than borrows from – the state’s “rainy day” fund. While it maintains spending on all the most important functions of government, Mills leaves the more ambitious investments in the state’s future, like rural broadband, child care centers and job training, to a bond package that may or may not get enough Republican support to reach the voters.
Without those bonds, this two-year budget could represent a missed opportunity for Maine families who have been hit hard by the COVID recession. Without help now, many of them will not be able to take advantage of a post-COVID recovery, leading to long-term economic fallout.
It’s important to remember that this recession is not like any other in recent memory.
People who were able to work remotely saw no disruption in their income because of the pandemic, and people who g0t some or all of their income from the stock market ended up having a good year despite an early shock.
In a typical downturn, the state loses tax revenue on sales of cars and building supplies. But construction did not slow down in 2020, and car sales were strong in the second half of the year and into 2021. Home sales were up 31 percent in December over the previous year and prices were up 15 percent, with one out of three sales going to an out-of-state buyer, bringing new money to local economies.
But not everyone has been so lucky. Unemployment is still high, with nearly 50,000 claiming jobless benefits last week, a number that has held steady for three months.
That doesn’t even count the people who have been out of work so long that they are no longer considered part of the workforce – including parents who have had to stay home because the pandemic has disrupted in-person school and day care for their children.
The longer people go without a job, the harder it is for them to get back in the workforce. That does permanent damage to their ability to earn a living and slows down the speed of economic recovery for everyone.
The rosy overall picture hides the fact that, like the downturn, the recovery is not affecting everyone equally. One in eight adults and one in five children experience food insecurity. Food pantries are coping with record demand.
According to Maine Equal Justice, more than 60 percent of extremely low-income Mainers pay more than half of their income for rent, and as many as 40,000 households report being behind on their rent and at risk of eviction.
All of these poverty indicators disproportionately affect families of color.
Some may think it’s time for the state to put money away for a rainy day. But for these families, it’s raining now, and they can’t wait.
We have good reason to expect that Maine can afford to be less cautious.
Aside from the positive economic trends, President Biden’s $1.9 trillion COVID relief bill is moving on a fast track through Congress. It includes $350 billion in aid for state and local governments and $170 billion to help schools reopen, it extends unemployment benefits and it would send $1,400 stimulus checks to most people.
The Legislature does not have to guess what Maine will get from the bill. It’s on schedule to be signed by Biden in mid-March, well in advance of the state’s June 30 budget deadline.
We supported Mills’ effort to compromise with Republicans and offer a double tax benefit to almost all the small businesses that received federal aid through the Paycheck Protection Program, because it targeted relief where it was needed.
That kind of creative work needs to be done on the budget, getting more help to the people who need it most. Whether it’s through new revenues or spending reserves, Maine should give all of its people reason to hope in 2021.
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