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Michael Cianchette is a Navy reservist who served in Afghanistan. He is in-house counsel to a number of businesses in southern Maine and was a chief counsel to former Gov. Paul LePage.
Does anyone like tea anymore?
I ask because of the one-two wallop of public finance headlines over the past week. Here in Maine, the Mills administration announced the next Legislature will face a projected “structural gap” — the difference between expected revenues and currently required spending — approaching $1 billion.
Meanwhile, the Congressional Budget Office issued its report on the just-finished federal fiscal year 2024. Our national deficit — call it the federal “structural gap” — equalled $1.8 trillion.
Fifteen years ago, the so-called tea party movement rose up in response to Washington’s bailout of the banks, rush to pass “Obamacare” and prospective increased taxation, among other things. By most accounts, the movement died sometime in the mid-2010s.
Some of the tactics of the tea party, especially around the debt ceiling, were foolhardy and short-sighted. But there was a spark of something good from a laser focus on public finances from fiscal hawks.
It seems that tea has now gone out of style and those hawks are nigh extinct.
I’m not sure where fiscal conservatives belong anymore. Vice President Kamala Harris’ proposals would add around $3.5 trillion to the debt over the next decade. Former President Donald Trump’s ideas would boost it by about $7.5 trillion.
Theoretically on the fiscal front, Harris is “less bad.” But that’s like choosing between two terminal diagnoses; it isn’t a choice worth making. Besides, it is Congress that controls the purse strings. Maine’s role in that saga is limited, to say the least.
However, closer to home, we can have an impact.
Some of the reaction to the announcement of the structural deficit is slightly overstated. This is, unfortunately, a common situation for Augusta. Gov. Paul LePage was left with a nearly $800 million structural gap from Gov. John Baldacci. Baldacci faced an almost $1 billion structural gap when he succeeded Gov. Angus King.
Gov. Janet Mills inherited a $504 million structural gap from LePage. But while both Baldacci and King left office with an effectively empty rainy-day fund, LePage left Mills with nearly $300 million to spare.
Yet, while there may be some dramatization of the gap, the blithe “this always happens” dismissals undersell the problem. Two years ago, there was a structural surplus of more than $300 million in the general fund. The highway fund was short around $712 million for a net structural gap of about $400 million.
The fact that the gap has more than doubled in just two years should be concerning to all Mainers. Critics can’t blame it on Republican tax cuts; Democrats have controlled Augusta. The logical cause, then, is increased spending.
That theory seems to be true if you actually read the report. The Mills administration is projecting government general fund revenues — mostly tax collections — will rise from about $10.5 billion to $11 billion. But projected general fund spending grows from $10.4 billion to nearly $11.7 billion. There is similar projected spending growth in the highway fund.
The next iteration of the Legislature is going to face challenges. Are lawmakers going to try to solve the problem by increasing taxes? That seems to be happening in municipalities across the state, with towns just deciding people should pay more.
Or will the Legislature be full of people who know that the art of governing is, unfortunately, deciding on priorities and acknowledging you can’t do everything? Resources are finite, and the answer on spending must sometimes be “no.”
Adding another layer, this will be Mills’ last biennial budget. The campaign to succeed her will undoubtedly impact the process as would-be candidates jockey for position with favored groups.
Mills has an important role to play as the elder stateswoman; is she going to leave office with a strong rainy-day fund and a reasonable gap, like LePage left her? Or will the Legislature press her to mortgage the future in order to solve their problems today?
Here’s hoping there are a few tea drinkers in the next Legislature. Maybe fiscal hawks can make a comeback.