Suppose that you hire a contractor to, say, build an addition on your home. Before you sign a contract with him to do the job, he provides you with an estimate of how much it will cost. If it takes more time or materials to do the job, you might have to pay him more; however, it’s reasonable to expect that if the job cost less than he thought, you’d end up paying him less.
State government operates on estimates, too: They estimate not only how much things will cost, but also how much revenue they’ll bring in. Some times those estimates are pretty much on target, and legislators can just pat themselves on the back for doing such a great job. Sometimes a program costs way more than they expected or revenues plunge, and they have to find a way to make up the differences through either tax increases or spending cuts.
Next year, though, legislators are in for a different sort of conversation, since the state is projected to have a surplus of about $800 million. That’s a lot of money: It’s around as much as 10 percent of what the state expected to spend over the two-year budget period.
In a saner world, when the government brings in more money than it needs to operate, it would be automatically returned to the people in the form of tax cuts. After all, this is money that the government took from you, the taxpayers, that they didn’t end up needing after all – they should just give it back. If a contractor comes in under his estimate, he doesn’t debate whether to just pocket the difference and buy his family a new flat-screen – at least, not if he’s honest. Legislators should take the same approach when there’s a budget surplus. That’s a key difference between the two parties in their fundamental approach to governance: Republicans view surpluses as excess funds that ought to be returned, while Democrats view it as a chance to go on a spending spree.
There’s no doubt that, if Republicans were in charge in Augusta, they’d do the right thing and return the excess revenue to the taxpayers. There would still be plenty of debate about how exactly do to that; it doesn’t need to be given back in the same proportions in which it was collected. The tax cuts could be focused on significantly reducing, or even eliminating, one particular kind of tax, like the income tax or the sales tax. The surplus could be used to not only cut taxes, but also further simply and reform Maine’s tax system, especially the income tax. Republicans aren’t in charge, of course, and we can rest assured that majority Democrats looking at that windfall are simply dreaming up ways to spend it. There’s no way they would ever consider simply using the entire surplus for tax cuts; indeed, most of them probably would prefer not to cut taxes at all.
By playing their cards right, though, Republicans can still have an influence over the budgetary process. In approaching the issue, they ought to keep a few key principles at the front of their minds. First and foremost, if much of the surplus is to be spent by the state rather than returned to the taxpayers, it must be spent wisely. The first logical step would be to deposit a sizable chunk of it into the state’s rainy day fund, to help Maine weather any future economic crises.
Another would be to consider wise investments in the state’s future. A key critical area that is chronically underfunded is infrastructure. While Maine may be getting as much as $2.4 billion from the recently enacted federal infrastructure bill, that shouldn’t stop the state from making its own infrastructure investments. If we set aside additional funding for maintenance, perhaps we can ensure that the projects funded by the infrastructure bill last this time around.
Republicans should also fight to ensure that, whether through tax cuts or some other method, most of the surplus is spent on aid sent directly to struggling Mainers. With the economy still struggling and winter coming upon us, plenty of people out there are going to need assistance. The important note here is that individual assistance should be distributed not through a new program, since that requires additional overhead, but through effective, simple, pre-existing means. Then we end up actually helping the people who need it, rather than simply creating more bureaucracy in Augusta.
Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
jwfossel@gmail.com
Twitter: @jimfossel
Send questions/comments to the editors.
