Defending Janet Mills, Maine Dems argue tax cuts are “spending” but actual spending is not

Senator Erin Herbig (left), Gov. Janet Mills (center) and Sen. Michael Carpenter (right) have each made arguments trying to redefine what “spending” and “tax cuts” actually are.

AUGUSTA – Income tax cuts are now “spending” and new spending is now “tax relief” even if those taxes still actually went up.  If that statement gives you a bit of whiplash, you’re not alone.  But it’s the argument being put forward by Governor Janet Mills and her allies in an attempt to rebrand her new state budget as something other than a clear, black-and-white 10% state spending increase.

When Governor Mills refused to acknowledge how much her new state budget increased spending in a radio interview on The Mike Violette Show she raised eyebrows across the state.  It turns out that this was not the first time a supporter of Mills’ budget had made an argument that attempted to twist the definition of spending and tax cuts to defend the recently approved budget.

In an op-ed in The County, Senator Mike Carpenter (D – Aroostook) argued that the budget passed by the Maine Legislature and signed by Gov. Janet Mills was actually smaller than the budget proposed by outgoing Governor Paul LePage.

“In fact, this new budget spends significantly less than what Gov. Janet Mills proposed, and even less than the budget recommended by outgoing Gov. Paul LePage, who is well known for being staunchly fiscally conservative,” wrote Senator Carpenter in The County.

Carpenter’s argument relies upon labeling LePage’s proposed 20% income tax cut as government “spending” instead of as a reduction in tax rates which genuinely reduced taxes on the people of Maine.

Maine People Before Politics, a non-profit with ties to LePage, blasted Carpenter, saying, “Liberals like to count the tax cut, which is money you would not pay the government, the same as government spending.

In other words, your money is their money, before you have even paid your taxes,” said the group.

At the same time Democrats are attempting to label LePage’s proposed tax cut as “spending” they are trying to label actual government spending increases to Maine cities and towns as not “spending” but “property tax relief.” This attempt from Democrats comes although there is evidence it did not result in property tax relief. Senator Mike Carpenter and Governor Mills have both made that argument. Senator Erin Herbig made a similar argument last week on the George Hale Ric Tyler Show.

This puts Democrats in a pretty tight box.

On one hand they have to argue that income tax cuts proposed by LePage as he left office were actually government “spending,” but then to answer critics who say they overspent in the budget, they have to claim that their apparently failed attempt to cut property taxes by pumping tens of millions into local government coffers is not actually government “spending.”

It’s essentially a wholesale attempt to reverse the political definitions of what spending or tax cuts are. But the proof that the spending Democrats are trying to label as property tax relief is not really reducing property tax rates is already on the books in many communities.

In the new state budget, the state of Maine increased revenue sharing from 2.5 percent to 3 percent. In theory, the program is meant to provide funding to municipal governments to offset local spending and avoid property tax increases.

The reality in both the past and present day is that increasing revenue sharing has not had a meaningful impact on controlling property taxes, let alone reducing them. A 2015 report from the Maine Heritage Policy Center titled “Revenue Sharing: A Failed Program” showed quite the opposite.

Historically, the report says, when revenue sharing increases, municipal spending rises and as a result, so do local property taxes. Increased revenue sharing actually correlates with higher property tax rates, the report says.

In the current circumstance with the budget pushed and then eventually signed into law by Governor Janet Mills, the path to any property tax reductions was met with a new challenge of Mills’ making.

Along with the spending increase resulting from boosting revenue sharing, Mills’ budget also mandated pay raises for public school teachers. It did not provide adequate state funding to support the raises over the long-term. Even more troubling for some school administrators is that the new mandated salary is likely to cause teachers who were previously higher paid, school support staff and other school employees to also push for raises in their contract negotiations. That cost could turn what looks like a short-term financial boost to some schools and towns into a long-term property tax hiking liability.

Among the top twenty largest municipalities, predominantly represented in Augusta by Democrat lawmakers, many have already seen increases in their property tax rates, contradicting claims by Mills, Carpenter and others.

Portland’s property tax mill rate has already increased in spite of the state revenue sharing increase.

Biddeford; Bath; Auburn; Bangor; South Portland; Sanford; Brunswick; Saco; Westbrook and most of the other of Maine’s twenty largest cities increased their property tax rates for the coming year despite the revenue sharing bump.

Those cities are largely represented by Democrats in the Maine House and Senate who now must try to convince their constituents that they lowered property taxes even though local property taxes have risen once again.

It is not clear what has politically changed since Governor Janet Mills proposed increasing the state budget by more 11% at the start of 2019 but it appears something has altered Mills’ strident approach to how she talks about spending.

It may be that with the upcoming legislative session rumored to feature even more spending increases, Mills and her allies are trying to change the perception of recent spending increases to make room for more.

Or it could be that with most Mainers facing higher property tax rates and no reduction in other taxes, Mills and her allies are feeling the heat for nearly $1 billion in new spending in the state budget that most Maine taxpayers don’t see any real benefit from.

Regardless of what happens in the Maine Legislature in 2020, allies of Janet Mills appear intent on arguing that income tax cuts are spending – but spending more in the state budget is not always an actual spending increase.

Stay tuned. With rumors flying that more spending is on the way in the new year and Governor Mills and some of her allies considering an increased gas tax, things are likely to change again for Maine taxpayers in 2020.

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