Monday February 11th, 2008
Kurt Wise
For Immediate Release
February 11, 2008
Augusta — This week, the Maine Center for Economic Policy (MECEP) released an issue brief exploring data regarding Maine state government spending. “Virtually all of the growth in spending in the last five years has occurred in Maine’s federal funds account,” states Kurt Wise, fiscal policy analyst and author of the report. “This spending does not result in higher state taxes for Maine’s people.” Excluding increases in K-12 spending which voters approved, General Fund appropriations actually declined by 1.2 percent in 2007, following a 0.5 percent decline in 2006.
While Maine collects the majority of its in-state revenues through taxes, many other states rely more heavily on fees and other mechanisms. Appropriate comparison among states should include all these different forms of in-state collections (own-source revenue). Using own source state and local revenue as a percent of total personal income, Maine ranks ninth among all states, not second as the Tax Foundation has erroneously publicized.
The growth limits adopted in LD1 in 2005 require Maine to hold spending close to the rate of inflation (3.11%), and state and local governments are meeting and significantly exceeding most of these goals. Actual rates of growth in taxes as a percent of personal income have fallen slightly below set limits and spending growth has fallen well below set limits.
“LD 1 does not say anything about making Maine average,” states Christopher St. John, executive director of MECEP. “The purpose is to reduce state spending as a percent of Mainers’ total personal incomes to the point where Maine would fall within the middle third of all states by the year 2015.” The state is on track toward reaching this goal.
The paper points out that Maine’s spending per person is already slightly below the US average. Because Maine incomes are well below the US average, recent suggestions that Maine aim for spending at the average US ratio of state spending to personal income would actually require Maine to deliver below average state services. “The argument that to deliver below average education and health care could possibly improve the state’s economy is seriously and obviously misguided.”
