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February 26, 2021

Group urges $400M annual revenue boost to solve Maine poverty, equity issues

Photo / Maureen Milliken A group of 13 organizations has called on the Maine State Legislature to find a way to increase revenues $400 million annually to help undo the damage of years of underfunding to education, health care and more.

Lagging education, health care and other needs that disproportionately affect the state's low-income and nonwhite residents could begin to be solved with a $400 million annual boost in revenue, achieved through state tax codes changes, a wide-ranging group of organizations says.

A group of 13 organizations including the AFL-CIO, Maine Council on Aging, and others, told the state's legislators in a letter this week that the move would not only help fund Maine’s COVID-19 recovery, but also begin to undo the damage of years of underfunded programs that are having an exponential effect, including increasing hunger and homelessness.

The letter, sent to every member of the House and Senate, comes as lawmakers get ready to consider several bills that would raise revenue, including changing the tax code for higher incomes; increasing taxes on corporate profits of more than $3.5 million; closing corporate tax loopholes, including the offshore tax haven loophole; and strengthening the state’s estate tax.

The group urges legislators to address "the elephant in the room: our state’s inadequate, out-of-date tax code," specifically, tax changes by former Gov. Paul LePage that cut tax rates for high-income residents and corporations.

"This year’s session is an opportunity not only to turn the tide on the pandemic, but to make major progress to reduce hardship, build a stronger future, and reverse inequality," the letter says. "The risk to our future is not in doing too much to build back better, but in doing too little." [To read the full letter, click here.]

The letter urges lawmakers to commit to raising $400 million in new revenue annually. While that figure would not meet all of Maine’s unmet needs, it would allow lawmakers to fully fund the state’s 55% commitment to public schools and municipalities "for the first time ever" and leave roughly an additional $250 million available to meet other urgent needs, it says.

The letter's signers are Behavioral Health Community Collaborative, Maine AFL-CIO, Maine Center for Economic Policy, Maine Council on Aging, Maine Education Association, Maine Equal Justice, Maine Immigrants’ Rights Coalition, Maine People’s Alliance, Maine Service Employees Association - SEIU Local 1989, Maine Women’s Lobby, Mainers for Working Families, Planned Parenthood Maine Action Fund and Southern Maine Workers’ Center.

'Making do' is not enough

The letter was mailed to lawmakers the day before Gov. Janet Mills announced Tuesday a $111 million "Back to Work" bond proposal related to her $8.4 billion two-year budget proposed in January. The bonds and budget attempt to address a projected $255 million shortfall this year and $395.8 million in the budget years of 2022-23 budget.

She has said she will not seek big budget cuts, and also is not looking to make changes to tax breaks for high-income Mainers or raise taxes in other ways.

The state Department of Administrative & Financial Services reported Thursday that revenues are trending better than expected, with January’s General Fund revenues surpassed the projections of the state Revenue Forecasting Committee by $89.5 million, or 25% for the month.

But the coalition letter says that the state's issues, which exponentially affect low-income and  Mainers of color, are the result of years of lack of financial attention and will take a major effort to turn around.

“Even before the pandemic, existing revenue streams were inadequate to address Maine’s largest challenges,” the letter says. “Every budget cycle, the Legislature does what it can to ‘make do,’ but there’s never enough revenue to meet even basic commitments. Meanwhile, other legislation that would improve Mainers’ lives fail — not for lack of political support, but for a lack of funding.”

Legislation that would improve lives fails, not for lack of political support, but for a lack of funding, the group says.

"This dynamic has existed for years, but was supercharged under former Gov. Paul LePage, who cut taxes for those at the top and eliminated or underfunded critical services that improve Maine for everyone."

Among other tax changes, LePage, who was governor from 2011 to 2019, lowered the top marginal individual income tax rate from 8.5% to 7.15%, which he touted as "the largest tax cut in Maine history," and increased the death tax exemption from $1 million to $5.45 million.

Unmet needs, inequity

Some of the issues cited in the letter are:

  • Public schools underfunded by $2.54 billion over the past 10 years;
  • A $707 million shortfall that has had to be covered by local property taxes to fund services such as road maintenance, parks and water treatment.
  • Roughly 19% of Maine adults could not afford their monthly bills before the pandemic, and 17% could not afford a $400 emergency, like a car repair or hospital bill. Another two in 10 Maine adults would have to take on debt or sell belongings to afford that same emergency.
  • "Decades of underinvestment" have left state government workers underpaid by 15%, on average, depressing the incomes of one of the largest workforces in Maine.
  • Maine's rental housing market is among the least affordable in the nation, with nearly 60% of extremely low-income households payubg more than 50% of their income for rent. In the midst of the pandemic, roughly 20,000 – 40,000 Maine households are behind in their rent and at risk of eviction.
  • 1 in 8 adults, including 1 in 5 children, experience food insecurity yearly, and more than half of all Maine households with children are “not at all confident” or “not very confident” that they would be able to afford needed food in the next four weeks. Food pantries say the pandemic has prompted a 50% spike in demand for food assistance across the state.

"Hardship falls disproportionately on Mainers of color," the letter says. "Black communities in Maine have contracted COVID-19 at a rate more than 20 times that of white Mainers. Black, indigenous and people of color are more likely to be unemployed due to the pandemic, with Black workers more likely to experience longer periods of unemployment than white workers.

"At the same time, workers of color are less likely than white workers to receive unemployment benefits for which they qualify, and inequity in access to reliable, high-speed Internet means many people of color and immigrants lack the connectivity they need to study, attend online classes, apply for jobs, or work remotely."

The letter says that it's alarming that 26% of Maine’s homeless population is Black, even though they make up only 1% of Maine’s population.

The letter comes on the heels of a report by the Maine Economic Policy Center in November that said reversing race inequity in the state would boost individual incomes, create jobs and increase the state revenue.

There has been some progress by the Mills administration since she took office in January 2019, the letter says, including:

  • Funding for public schools essential programs and services and Municipal Revenue Sharing "have inched upward — progress after years of cuts."
  • Medicaid expansion, approved by voters, was implemented, and as a result, more than 70,000 Mainers have coverage than had it a year ago.
  • Before the pandemic, childhood poverty in Maine was on the decline, "thanks in part to voters’ and policymakers’ support for raising the minimum wage and other policy changes made to strengthen the safety net."

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