The Smart Money: What's to be cut? What's to be added?

Posted Wednesday, March 4, 2015 in Analysis

The Smart Money: What's to be cut? What's to be added?

by Gina Hamilton

The budget process is by now well underway in Augusta, and we've already looked at the tax side, which was presented as a tax overhaul, the revenue side of the budget. But what is Governor Paul LePage proposing for the spending side?

Because the tax revenue will likely drop, LePage is proposing spending cuts, which was predictable. But where he is choosing to cut spending is leaving many members of the Legislature -- Republicans and Democrats -- rather cold.

First, there will be cuts to cherished middle class tax breaks, if the LePage budget clears committee and passes muster with the full Legislature. Among the most hurtful to the middle class will be the mortgage interest deduction, which is used by many to pay property taxes, limiting property tax programs and Homestead exemptions to the elderly or to veterans, and ultimately doing away with revenue sharing.

Towns and cities will get it in the neck as LePage slowly attempts to do away with municipal revenue sharing. For most towns, that will mean a tax shift from the progressive income tax to increases in a regressive property tax, just to make the budget. This will save no money for taxpayers -- indeed, it will increase the total taxation -- but it may balance the state budget while also cutting income tax for the highest earners.

But the other side to the issue is the populations who will be injured by the cuts to the budget itself.

Some funds are being diverted from Medicaid and other safety nets -- including the drugs for the elderly program -- to meet increasing needs in nursing homes, to fund vital services to the elderly and disabled, and to fund mental health under the consent decree. But to do that, LePage wants to cut "able bodied" adults from Medicaid, or as it is known in Maine, MaineCare. The adults may be able bodied, but many are at home caring for someone who isn't -- a disabled child, a parent with Alzheimer's, or a spouse dying from cancer -- and cannot work.  Without health insurance, such people may not be able to long care for the patients, and the patients may have to go into skilled nursing homes, at the cost of $100,000 per year or more. The cost of Medicaid is about $4,500 per year. The trade-off is economical and makes good fiscal sense. If making a small investment in a caregiver prevents a patient from needing skilled nursing home care, the benefit to the state per patient is on average $95,500 per year.

LePage would also end much support for general assistance to the poorest Mainers, especially legal immigrants.

However, he would increase funding to the Maine Maritime Academy and flatline other schools, and also increase drug enforcement.

The big winners, however, are corporations and the very wealthy, who will see their income tax plummet. So far, only one former legislator has spoken in favor of the budget, Former Rep. Dennis Keschl (R-Belgrade).

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