Budgeting is no easy task, particularly for an entity as large as the state. Appropriating revenue toward expenditures, all while keeping the tax rate reasonable, presents a huge challenge, and once people become accustomed to a tax break, subsidy or service, the outcry is significant when cuts are made.
A group of lawmakers, economists and business experts have been convening this fall, according to Associated Press reports, tasked with proposing a plan to find $40 million in savings in the state budget. It’s been made clear that the state can’t pay its bills for the services and tax incentives it currently provides, so we are facing either cuts or further reductions to municipal revenue sharing.
At question is whether the savings should come from tax incentive programs, as the task force has proposed, or if state spending should be cut instead.
We believe a balance is called for here, with a little bit of both.
Among the panel’s proposals are: a cap on a tax credit program that reimburses workers for student loan payments if they choose to work in Maine after graduation; limits on historic restoration tax credits; cutting a reimbursement that encourages businesses to hire new employees; and eliminating a property tax reimbursement for some retail stores.
The student loan cap has drawn the most outcry, from those who claim the cap would have a negative impact on the state’s economic development and ability to attract young workers. We agree that implementing this cap, which is expected to save only $2 million, would be a setback for the state.
As it stands, the program, through Opportunity Maine, provides student loan reimbursement for those who earn an associate or bachelor’s degree at a Maine school and continue to live and work in the state.
Earlier this fall, economist Charles Colgan was in Sanford to discuss the state’s economic forecast and noted that the state is facing a challenge in attracting young workers ”“ one that will impede the economy’s ability to grow.
The Opportunity Maine program is a way to encourage young people to not only study in-state, but to also live and work here after graduation, where they will build lives and contribute to the economy. It’s an investment in the state’s future, which means it’s money well spent.
As for the historic restoration and business tax breaks, those sound like valid cuts to consider, although the impact on hiring should be reviewed. One of the important aspects of this panel is their plan to review such tax breaks to see if they are having their intended effect. The Pine Tree Zone tax break, for example, was questioned in recent years, as it was supposed to encourage hiring but did not always meet that goal.
The panel’s recommendations will be sent on to the state’s budget writing committee for consideration, and we hope they heed the advice of this panel and find an appropriate balance.
A study is already underway on the state’s welfare system, and we’re confident the proposals that arise from that effort will also be helpful in finding efficiencies there to reach that $40 million. Opinions on the state’s welfare system vary widely, but each side seems to have its own studies; it’s difficult to say whether the system is a well-functioning safety net or an over-used crutch.
One of Maine’s strong points in the welfare system, however, is its allowance for TANF (Temporary Assistance for Needy Families) recipients to attend school in place of the work requirement, and we feel that’s in line with the college loan reimbursement program. Getting people educated and into the workplace so they can support themselves and their families is the ultimate goal, and provisions that support that goal should be embraced.
The towns and cities of Maine cannot afford more property tax increases or cuts at the local level, and many have already taken significant hits with the last round of cuts to municipal revenue sharing. It’s time for the state to make ends meet, even if that means cutting state services or ending some tax breaks to which we’ve become accustomed ”“ so long as the full impact of such changes is taken into account.
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Today’s editorial was written by Managing Editor Kristen Schulze Muszynski on behalf of the Journal Tribune Editorial Board. Questions? Comments? Contact Kristen by calling 282-1535, ext. 322, or via email at kristenm@journaltribune.com.
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