When a family faces economic hardship, not only do they sit at the kitchen table and figure out how to cut their spending, they also try to find ways to come up with more money. It the roof leaks or the foundation cracks, they know it makes more sense to fix them than to put their home in jeopardy. Maine’s next governor and Legislature must approach Maine’s projected $1.17 billion revenue shortfall with this same common sense.
The next few years will be extremely challenging for Maine and its economy. Like the family facing economic hardship, a plan that focuses solely on cutting public investments and services will do more harm than good and take years to recover from.
To ensure that Maine is a place where people can raise a family, start a business and reach their full potential, our post-election discussions must include all options essential to resolve a situation Mainers didn’t cause. The unprecedented collapse in revenues is a result of the longest, deepest recession since the Great Depression caused by 30 years of unsuccessful national economic policies and the failure of the federal government to effectively regulate catastrophic malfeasance on Wall Street and in the real estate market. Recovering from this crisis requires us to acknowledge that no one creates economic prosperity alone. Growth depends upon the public and private sector working together. Business and household success requires effective, efficient public spending in areas like education to prepare future workers for the high-skill needs of growing employment sectors. It demands a healthy, productive workforce with access to affordable health care that stresses prevention. It thrives on investment in transportation, energy, communications technology and other infrastructure necessary to meet existing and emerging needs.
Maine people have a right to demand the most cost-effective delivery of public services possible, but we cannot simply cut our way to prosperity. Diagnosing our problem as one of overspending as some on the campaign trail have done, and prescribing cuts in spending as the sole course of action would have disastrous consequences. Beyond the families of teachers, police and fire personnel and other government employees who lose their jobs, the ripple effect through the entire state economy can trigger a wave of additional job losses, affecting private sector employers who receive state contracts and businesses where the people who lose their jobs currently shop. Slashing $1.1 billion from the budget in 2011 could cost as many as 25,000 lost public and private sector jobs. With more than 100,000 Maine people already unemployed or underemployed in this recession, such additional job losses would be devastating and take years to recover from. The last thing our economy needs is more people out of work.
Maine must adopt a balanced approach to its budget challenges, one that includes additional revenues. Historically, increased federal funds have offset declines in general fund revenues to stabilize state spending. The American Recovery and Reinvestment Act served this purpose during the last budget cycle, but with no such assistance on the horizon states will have to choose between jeopardizing future prosperity by overlooking widening cracks in their economic foundation or finding new sources of revenue to sustain critical public investments and address growing public needs. Recognizing this challenge, more than 30 states have raised taxes since the recession began. While each has also cut spending, they recognize that relying on spending cuts alone would be counter-productive. To date, Maine has addressed its recent revenue problems with cuts alone.
Winning an election is one thing. Governing effectively is an entirely different endeavor. Time and again, Mainers have demonstrated a preference for shared solutions and shared sacrifice over rigid ideology and political scapegoating. Facing one of the most severe revenue shortfalls in our state’s history on the heels of a highly charged election season, we can only hope that our better angels prevail once again.
— Garrett Martin is associate director of the Maine Center for Economic Policy.
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