A Divide and Conquer Strategy that Risks the Health of Maine’s Seniors and Working Poor

The classic “divide and conquer” strategy,  often attributed to cunning Julius Caesar, operates on the premise that pitting your adversaries against each other before you strike  is one sure path to victory. In a recent press release heralding $25.4 million in excess MaineCare funds now available to shore up struggling nursing homes, the LePage Administration appears to be following Caesar’s formula.

This funding is great news for nursing homes in Maine – especially in rural areas where many are struggling badly. But the timing and explanation for the sudden availability of the money raise a lot of questions.

Last November, Health and Human Services Commissioner Mary Mayhew shocked the legislature by announcing that Medicaid faced a $100 million shortfall.  But in June, the commissioner unexpectedly heralded a $4.6 million surplus fortuitously available to leverage another $8.5 million in federal funds for besieged nursing homes. The governor’s office claim that his repeated vetoes of accepting federal funds to expand Medicaid to 70,000 uninsured Mainers “have been key factors in freeing up funds for nursing facilities” is a political move worthy of  wily Caesar.

The release argues that the only way to pay for nursing homes is by denying low-income working Mainers health coverage. But this is a false choice that clearly pits the interest of two vulnerable constituencies- aging Mainers and the working poor –against one another.

In fact, federal law forbids the state from using funds appropriated  to expand coverage to the uninsured- the funds the governor cites -to pay for anything else. Maine- the only state in New England to refuse the funds- continues to lose almost $1 million in healthcare dollars every day.   In the meantime, the federal government has paid 100% of the costs of coverage in the states that expanded Medicaid – just as promised.

Maine’s nursing homes have been struggling for years. Perhaps the most heart-wrenching case was the 2012 closing of Atlantic Rehabilitation and Nursing Center in Calais, The closure displaced elderly residents to Ellsworth 100 miles from their homes, and put almost 100 local workers out of a job.  The governor failed to act then, even after 1,800 residents petitioned him to reconsider Commissioner Mayhew’s authorization of the closure. This spring, many more nursing homes have been open about their financial struggles.

There’s more backstory to this press release. In 2011, the governor proposed to pay for $60 million in tax cuts for the wealthy via cuts to reimbursements to assisted living facilities caring for seniors. This year, in response to the Calais nursing home closing, Senator Margaret Craven of Androscoggin sponsored a bill allocating additional funding to nursing homes. This bill became law without the governor’s signature.

The governor may be following a familiar political strategy when he makes the false claim that health care for the working poor will come at the expense of health care for Maine seniors. But in this game of divide and conquer, the losers are the Maine seniors and working poor whose access to quality, affordable health care are put at risk.

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LePage’s Erroneous Bonds Policy Seriously Threatens Maine Hospital Finances

Last week, the (Lewiston) Sun Journal reported that the LePage Administration’s anti-bonding policies are forcing MaineGeneral Medical Center to pay $42 million more in interest on loans than is necessary on the construction of their new hospital in Augusta. That’s $1.4 million in avoidable interest payments annually for 30 years.

MHHEFAThe legislature created the Maine Health and Higher Education Facilities Authority (MHHEFA) to allow entities like hospitals, nursing homes, public colleges, and other eligible nonprofits access to low-interest bonds. For 25 years, nonprofits have been able to join a pool under the MHHEFA that garners them lower interest rates saving money on medical costs, elder care, tuition rates, and other community services.

For more than three years, Governor LePage has refused to authorize the sale of the nonprofit bonds asserting that voters should approve them and that, if the institutions default, the state’s credit rating will be impacted.

By law, the state is not liable for repayment of these nonprofit bonds. However, if the institutions default, the state would have a moral obligation to repay them, thus they are frequently called “moral obligation” bonds. But Robert Lenna, who conceived of the idea for MHHEFA, calls concerns about an impact on the state’s credit rating “nonsense” and points to safeguards that protect the state, including healthy reserve accounts maintained for just this purpose.

The governor’s professed deference to voters is a sham. He has twice refused to authorize bonds that the voters did approve.  And earlier this year, he proposed his own moral obligation bond for a $100 million renovation to the Windham prison through bonds issued by the Maine Governmental Facilities Authority (MGFA), without regard for voter approval. MGFA is an entity almost identical to MHHEFA, for use by the courts and other state agencies.

Hospitals in Maine today are struggling. The Maine Hospital Association (MHA) reports that an all-time high two-thirds of its 38 member hospitals are implementing layoffs and pay freezes to address financial shortfalls. Hospitals in Augusta, Ellsworth, Brunswick, Bridgton, Rumford, and Calais, have recently announced layoffs.  In March this year, the Eastern Maine Medical Center in Bangor reported a $7 million budget shortfall. And Maine’s biggest hospital, Maine Medical Center, cut 225 jobs due to a $13.4 million operating deficit in August 2013. The hospitals cite fewer patients, lower Medicaid and Medicare reimbursements, and higher charitable care costs as factors contributing to their financial woes, but they also say Maine’s failure to expand Medicaid under the Affordable Care Act has made lay-offs necessary.

Maine needs healthy hospitals and the jobs they provide our communities. We need state policies that bolster our hospitals, not ones that cost them more money and force lay-offs of hardworking Maine people. Governor LePage’s refusal to allow hospitals access to low-interest MHHEFA bonds is weakening our hospitals’ finances, undermining Maine’s economy, and will unnecessarily raise health care costs for all of us.

State Income Tax Revenue Falls as Bill for 2011 Income Tax Cuts Comes Due

Four years after Maine Revenue Services (MRS) and the Legislature’s nonpartisan fiscal office put a $166 million price tag on Governor LePage’s income tax cut, an enormous decline in FY 2014 state income tax revenue appears to be validating their estimates. State income tax revenue through the first 10 months of fiscal year 2014 is $109 million—or 8.9%— lower than it was last year, according to the State Controller’s latest revenue report for the all-important month of April. This revenue drop-off is the result of two factors: the state income tax cut passed by Maine lawmakers in 2011, and an artificially large increase in personal income and tax revenue in 2012, driven by high-income taxpayers anticipating inevitable federal tax increases in 2013.

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Anticipated Federal Tax Increases in 2013 Pushed Up 2012 Revenues

High-income taxpayers in Maine and across the nation shifted income from 2013 into 2012 in anticipation of the “fiscal cliff”—a series of automatic federal tax increases and spending cuts scheduled to automatically take effect at the end of the year. This shift drove large increases in state income tax revenues all across the nation in Fiscal Year 2013, which ended June 30th 2013. In Maine, total personal income tax revenue in Maine increased by nearly $90 million (6.2%) in FY 2013, but that only ranked 34th among the 43 states that collect personal income taxes, and 31st on a per capita basis, according to MECEP analysis of Census Bureau data on state tax collections.

Congress passed the American Taxpayer Relief Act (ATRA) on January 1st 2013 to deal with the fiscal cliff. Although ATRA increased taxes compared to 2012, it prevented much larger tax increases had Congress failed to act.

State Income Tax Cuts Are Driving This Year’s Decline in Revenue

Meanwhile, on the same day that Congress passed ATRA, Maine’s historically large income tax cut began to take effect. Passed by Maine lawmakers in 2011, the tax cut Governor LePage proclaimed the “largest tax cut in Maine history” reduced Maine’s top income tax rate from 8.5% to 7.95%, collapsed the 4.5% and 7% brackets into one 6.5% bracket, and replaced the 2% bracket with a 0% bracket. MRS estimated the cost to the state to be $79 million in fiscal year 2013. Without the tax cut, Maine income tax revenue in FY 2013 would have increased by 11.7% instead of 6.2%, and Maine would have ranked 17th in per capita personal income tax revenue growth that year instead of 31st.

With state personal income tax revenue artificially inflated in FY 2013, a downward correction in FY 2014 was inevitable. Through the first half of FY 2014, nearly all states that levy personal income taxes are experiencing slower annual growth than the year before, and 11 states are on track to see an overall decline.

Maine’s current drop in personal income tax revenue is especially large thanks to the 2011 state personal income tax cut, estimated to cost $166 million this year. FY 2014 marks the first full year to gauge the impact of the tax cut on the state’s budget, and so far the original estimated cost from MRS and the Legislature’s nonpartisan fiscal office appears to be close to the mark: income tax revenue is about $28 million over the forecasted amount so far this year, but $14 million of that is due to the fact that the Property Tax Fairness Credit—a new income tax credit for low-income Mainers with high property tax bills—is turning out to cost much less than expected. The cause of the remaining $14 million of the surplus income tax revenue so far this year is tough to determine; it could be due to any number of factors and is small enough to be within the typical margin of error in an overall forecast of $1.4 billion in annual income tax revenue.

Tax Cuts Have Consequences

There is no sign that the income tax cuts enacted in 2011 are costing any less or more than was originally forecast. Tax cut advocates like to claim that Maine’s current procedures for forecasting the impact of tax cuts fail to account for taxpayers working harder and the economy improving when policymakers cut taxes. But in most cases, including the 2011 tax cut, there is little evidence of these “dynamic” supply-side effects, and to the extent they occur they are adequately accounted for in Maine’s current procedures for estimating the cost of proposed tax changes.

With large tax cuts, only one thing is certain: they reduce tax revenue and make it harder for us to make the public investments in education, workforce training, research, infrastructure, and the rest of the foundation required for a thriving 21st century economy that works for everyone.

Everything comes with a cost: the perilous (and unnecessary) fate of the Portland Free Clinic

Despite the historic opportunity offered by the federal funds available to expand Medicaid to cover Maine’s uninsured, millions of dollars earmarked for our state have been lost – more than $143 million since January 1 -repudiated in a din of partisan politics.  The governor vetoed majority votes in favor of Medicaid expansion five times.  But decisions have consequences – and one of the consequences might be the future of the Portland Free Clinic.

Operating on a shoestring annual budget of $110,000 for 21 years, the Portland Free Clinic has served the uninsured at no cost.  Medical providers donate more than 2,000 hours of their time each year.  The clinic serves the working poor.  Free Clinic patients earn too much to qualify for the existing Medicaid program, but too little to afford health insurance or participate in the Affordable Care Act Marketplace.   Now the clinic’s existence is threatened.  The unmet need for healthcare is outstripping the clinic’s ability to offer it.

It didn’t have to be this way.  Had Maine joined the rest of the New England states and accepted federal funds to expand Medicaid to cover the working poor, the Portland Free Clinic likely would not be in jeopardy.  69,500 people statewide would have coverage, and fewer would remain reliant on free care. Treating people costs money.  During the Medicaid debate in the legislature and the media, opponents dismissed the expansion as unnecessary, and some even advised the uninsured to sign up for hospital free care, as if this were a simple solution.  It’s not.  Pushing patients onto free care burdens hospitals and clinics with the costs of treating the uninsured.

In states using federal funds to expand Medicaid, hospitals and clinics are getting significant relief from the burden of uncompensated care, and it’s shoring up their bottom lines.  Ultimately, this normalizes rates for everyone – the privately insured no longer have to pay more to cover the costs of treating those who cannot pay.  Publicly traded hospitals report significant decreases in uncompensated care, and community health clinics are also benefitting.  Community health clinics mainly serve the low-income and working poor: this leaves them vulnerable to higher caseloads when more and more patients are uninsured.  2.9 million previously uninsured community health clinic patients are now covered in expansion states.  These patients will generate an estimated $2.1 billion in new revenue this year.

Maine’s 18 community health clinics serve 181,000 Mainers, including 26,000 who are uninsured.  A study by the George Washington University School of Public Health estimates that if Maine had expanded Medicaid this session, 21,000 patients would have gained coverage, resulting in $5 million in new revenue distributed among the clinics. Only 4,000 patients would remain uninsured and reliant on free or reduced care.

The Portland Free Clinic has done an admirable job serving its clients and fills a critical role for Cumberland County.  Now its future looks tenuous.  Had policymakers expanded Medicaid to cover the uninsured, the story probably would have a much different ending.

Taxes Have Little Effect on People’s Decisions about What State to Live In

A lengthy and exhaustive new report from the Center on Budget and Policy Priorities confirms what reality-based analysts have known for a long time: state taxes do not weigh heavily in people’s decisions about where to live and work.

Among the report’s conclusions, most of which will be familiar to folks who have been following this issue:

  • A very small fraction—no more than 2 percent—of Americans move to another state in a given year.
  • Of those who do move, most cite job- and family-related reasons for moving. Basic analysis of Census Bureau survey data shows that very few people move across state lines because of differences in state and local taxes.
  • A decades-long migration from the snowbelt to the sunbelt has been driven mostly by weather preferences and housing costs. Savings on housing costs are usually larger in these cases than savings on taxes.
  • Many specific state-to-state migration flows are inconsistent with claims about the impact of taxes. To take just one example, New Hampshire, which levies no income tax on wages and salaries and no sales tax, has seen net out-migration to states that do levy such taxes, including Maine.
  • The average family that moves across state lines is middle-class, not rich.

The report also confirms findings from MECEP’s analysis of IRS migration data, which shows that more people and income moved from New Hampshire to Maine than from Maine to New Hampshire over a fifteen-period beginning in the mid-1990s (you can use the Tax Foundation’s handy tool to see for yourself). From page 11 of the report:

New Hampshire lost migrants to income-taxing Maine and had little net in-migration. Overall, New Hampshire lost almost as many households to other states as it gained. Its lack of an income tax did not prevent some 373,000 households from moving out from 1993-2011, only slightly fewer than the 389,000 who moved in. All of New Hampshire’s net in-migration was attributable to in-migration from Massachusetts, mostly from the Boston metropolitan area.18 More than a quarter of the workers in such households continue to work in Massachusetts, and their migration is not driven by the absence of an income tax in New Hampshire since they would still pay income taxes on their wages and salaries to Massachusetts. Finally, Maine, which imposes the ninth-highest top income tax rate of any state, experienced net in-migration from New Hampshire from 1993-2011.

In other words, the data does not support the idea that tax policy is causing people to “vote with their feet” and move to New Hampshire.

Congressional Fiscal Shenanigans: O. Henry or Stanley Kubrick?

After weeks of gamesmanship, a minority in Congress succeeded in shutting down the federal government at midnight.  The full impact here in Maine is still uncertain.

We do know that on the cusp of peak leaf-peeping season, Acadia National Park will close and businesses on Mount Desert and throughout the surrounding area will feel the pain. Chris Fogg, executive director of the Bar Harbor Chamber of Commerce told the Portland Press Herald that 70 percent of local businesses have already reported losses of 10-20 percent when the park delayed opening the Loop Road for a month in the spring due to congressionally mandated sequester budget cuts.

“I think we are all hoping they will come to their senses and make a deal because the impact on our communities would be pretty significant,” he said.

The prevailing signs suggest that eventually they will. As President Obama put it last night, “One faction of one party in one house of Congress in one branch of government doesn’t get to shut down the entire government.”

The polls suggest that the government shutdown could be the tea party’s equivalent of “The Ransom of Red Chief,” O. Henry’s story, about two bumbling desperadoes who kidnap the child of a wealthy businessman and demand a hefty sum for his return. The scheme totally backfires when the kid turns out to be a menace, terrorizing his captors. The father replies to their ransom demand with his own ultimatum that they pay him to take his son back. Realizing they’ve made a huge mistake, the scoundrels eventually release the boy and beat a hasty retreat.

Sadly, such grandstanding has become standard operating procedure in Congress. And an even more dangerous threat looms on the horizon: if Congress fails to extend the nation’s debt ceiling before October 17, the federal government will default on its bills.

“Even if it’s a brief failure, it would forever be a signal to the market that you can’t trust the United States government to make its payment when it’s due,” Millan Mulraine, the director of United States research and strategy at TD Securities told The New York Times. “That would shake the foundations of the global financial system.”

Should the political theater carry over to the debt ceiling debate, the stakes will be much higher and the potential outcome more devastating. A better analogy for that eventuality won’t be O. Henry. It would be more like Stanley Kubrick. His classic Cold War black comedy, “Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb,” is about how the deluded actions of political extremist General Jack D. Ripper trigger a “doomsday device” that destroys civilization.

It’s time for the radicals in Congress to end the government shutdown and take their fingers off the switch that could lead to an international economic meltdown.

New Report Highlights How the Affordable Care Act Helps Close Affordability Gap

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This week the Kaiser Family Foundation released “An Early Look at Premiums and Insurer Participation in Health Insurance Marketplaces, 2014.” The report provides a summary of health insurance costs before and after federal Affordable Care Act subsidies kick-in for individuals who obtain coverage through the federal health exchange or health insurance marketplace. The premium for one of the middle-tier or “silver” plans for a 25 year-old, earning $28,725 living in Portland, Maine is $232 a month before federal subsidies become available. After the subsidies, the cost is $193 per month. For a 60 year-old earning the same income, the cost is $626 before subsidies take effect and $193 afterward.

This information highlights two very important points in the run up to the launch of the health insurance marketplace on October 1. First, individuals who currently lack affordable health insurance may find much better options through the marketplace. We should be doing everything we can in Maine to promote this opportunity. Second, as Gorman Actuarial predicted in its review of new health insurance laws the Maine legislature passed in 2011, it is the Affordable Care Act and not changes to how insurance companies set their rates that will ultimately reduce the number of uninsured people in Maine. Look no further than the pre-subsidy disparity in costs between older individuals and younger individuals for proof that absent the ACA things would be much worse for everyone but especially for older Mainers.

One final note. While the subsidies will be important in increasing affordability, they are not available to Mainers who will need them most as Governor LePage suggested in error at a press conference last week. Individuals living below the poverty line are not eligible for federal subsidies through the health insurance marketplace. That’s why it is vital that the state accept federal funds to expand Medicaid. Otherwise tens of thousands of Mainers will lack affordable access to a family doctor.

An Open Letter to Governor LePage

Dear Governor LePage,

You’ve got a jobs problem.

Since you took office, Maine ranks 46th in job growth and 47th in state economic growth. We’re last in New England in job growth and more than 100,000 Maine people are looking for work or are in search of full-time work.

You’ve got an unprecedented opportunity to improve Maine’s job picture. This isn’t theory, it’s fact.

What would you do if a large corporation called your office and said they were thinking of locating 3,100 jobs in Maine? I expect you would do everything in your power to roll out the red carpet. I suspect you might offer tax breaks and other enticements to seal the deal. I even doubt that you would care if the leader of the corporation were a Republican, a Democrat, or an Independent.

President Obama is calling Maine. He’s willing to locate 3,100 jobs in the state. He’s not asking for any tax breaks or demanding any special treatment. In fact, he’s offering to invest $250 million a year in Maine, provide health coverage to as many as 70,000 low income Mainers, and help larger Maine employers avoid costly tax penalties. Tax revenue generated by the new economic activity that these 3,100 jobs would create will offset the administrative costs associated with this deal. The Wall Street Journal, the Heritage Foundation, and Republican governors in other states affirm that this deal would be good for businesses in Maine and our economy.

You have suggested that perhaps we shouldn’t take this deal because there is no guarantee that the money that President Obama is offering will be there in the future. In truth, the same question could be asked of deals involving federal commitments that have created jobs in Maine and resulted in thousands of miles of roads, new bridges and water and sewer projects, destroyers built at Bath Iron Works, money for hospitals and health care providers, and scores of other federally-funded programs. When a company calls your office with an offer to locate in Maine, I don’t think you would reject the deal because they may close their doors at some point in the future. If the federal government went out of business, Maine and America would have far bigger problems on our hands.

There are plenty of other reasons why President Obama’s offer makes sense for Maine. Tens of thousands of people, the majority of whom are working, would qualify for health coverage. Everybody’s future health care cost increases would be lower. And if we refuse the President’s offer, Mainers will just be paying for health coverage for people in other states without getting any of the benefit ourselves.

The bottom-line is that the same argument you’ve been making about the job impact of repaying Maine’s hospitals is even more relevant here.

Rejecting federal health care dollars won’t create jobs. Accepting them will. Pick up the phone, take the money. Let’s get Maine’s economy back on track.

8 Points about the “Gang of 11” Tax Plan

Tax reform must do more for working families and to ensure funds to educate our children, build strong communities, and grow Maine’s economy

Recently a group of eleven legislators (five Republicans, five Democrats, and one Independent) has introduced sweeping legislation that according to the Bangor Daily News “slices the state’s individual income tax rate to a flat 4 percent — the highest rate now is 7.95 percent — and eliminates nearly all income tax deductions. The legislation also eliminates nearly all sales tax exemptions and raises the state’s 5 percent sales tax to 6 percent.”

MECEP commends these legislators for working together to come up with solutions to the Governor’s budget proposal and Maine’s outdated tax system. We continue to explore the details of this legislation to assess its impact on all Maine people. However, we cannot ignore the fact that the primary focus of the proposal is on increasing sales taxes in order to significantly reduce Maine’s income tax. With that in mind, we highlight eight concerns with this approach:

1. Maine’s income tax accounts for almost half of all General Fund revenue.

Dramatic cuts to the income tax will jeopardize our capacity to pay for education, health care, public safety, and other important services in the future. This is especially true since, as Maine recovers from the recession in the next few years, income tax revenues are expected to grow faster than any other revenue source. Cutting income taxes now is like selling an asset just as it is about to increase in value more than anything else in your investment portfolio.

2. Giving the wealthy and corporations large tax cuts paid for by massive sales tax increases is unfair to middle class and poor Mainers.

Maine’s tax system is already regressive, meaning low-income Mainers pay a significantly greater share of their income in state and local taxes than wealthier Mainers. The richest Mainers pay less than 10 cents on every dollar in state and local taxes, while the poorest 20 percent pay more than 17 cents on every dollar. The proposed flat 4 percent income tax, elimination of the estate tax, and reduction of the corporate tax will provide a huge windfall to wealthier Mainers and out-of-state corporations at the expense of low- and middle-income Mainers who will pay for it through a massive sales tax increase. For many Mainers, especially those who rent and small-business owners with multiple business locations, the bottom-line will likely be worse than it is now, despite efforts to make up for some of these costs through targeted tax rebates and improvements in the homestead exemption.

3. Cutting the income tax will not strengthen Maine’s economy.

States that enacted substantial personal income tax cuts in the 1990s had slower income and job growth and created jobs more slowly on average than more cautious states during the next economic cycle.[i] Investments in education and workforce development, transportation and high-tech infrastructure, and research and development – most of which require investments paid for with income taxes – are far more important to building a strong Maine economy.

4. Cutting the income tax will not keep wealthy residents from moving out-of-state.

Tax changes have little, if any, impact on people’s decisions to move from one state to another.[ii] For every story of someone who has left the state because of our taxes, there is a story of someone who has moved to Maine for our quality of life. The reasons people move have more to do with Maine’s natural environment, good schools, and vibrant communities offering a wide range of amenities, including many that are supported by investments that could be undermined by an income tax cut.

5. There are better ways to support small businesses and create jobs.

High-income households would benefit most from the proposed income tax cut, but most of them don’t own a small business so they aren’t in a position to create new jobs. Most small businesses earn such meager profits that cutting the income tax adds very little to their bottom-line and is not enough money to pay for a new employee’s salary. In fact, 87 percent of all U.S. small businesses either lose money or have under $50,000 in taxable income.[iii] The best way to support Maine small businesses and create jobs is to increase demand for the products and services they offer. Targeting tax relief to low- and middle-income Mainers and making sure Maine businesses are competing on a level playing field are better ways to encourage small business growth.

6. Not all property tax relief programs are created equal.

The tax reform plan acknowledges that different approaches to property tax relief result in different outcomes for Maine residents and businesses. However, their proposal does nothing to help the program that most effectively cuts property taxes for Maine residents who need it most – the Maine Property Tax and Rent Refund program. The legislature should invest more in this program and simplify the application process to ensure that hardworking Mainers who pay more than 6 percent of their income in property taxes get the break they need.

7. There are better, more targeted ways to tax nonresidents and out-of-state visitors.

Maine’s tax rates on meals, lodging, and rental car sales are below average in New England. Asking out-of-state visitors to pay more in these specific areas is much more targeted than a broad based sales tax increase that includes food and other basic necessities. Additional efforts to expand the sales tax to new areas should focus primarily on high-end services and recreational activities. This will generate much needed revenue that we can invest in Maine’s infrastructure and communities, making the state a more attractive place to visit and do business.

8. We still have a budget problem.

The tax reform plan is budget neutral meaning it does not provide additional funding for critical priorities like education, drugs for the elderly, public safety, general assistance, clean elections, and so much more. While the plan helps shine a light on ways to avoid some of the property tax increases in the Governor LePage’s budget proposal, Maine still faces a funding shortfall resulting from collapsing revenues in the wake of the recent recession and made worse by the 2011 tax cuts. There are better ways to address our immediate financial challenges, including repealing the 2011 income and estate tax cuts, making Maine’s state and local tax system more fair, raising revenues in more targeted ways, and reducing ineffective tax subsidies and exemptions.


[i] Michael Leachman, Michael Mazerov, Vincent Palacios, and Chris Mai. State Personal Income Tax Cuts: A Poor  Strategy for Economic Growth. Center on Budget and Policy Priorities, Washington  D.C., March 21, 2013.

[ii] See for example Jeffrey Thompson. The  Impact of Taxes on Migration in Maine. Political Economy Research  Institute. University of Massachusetts. Amherst, MA, April 2013.

[iii] Matthew  Knittel, Susan Nelson, Jason DeBacker, John Kitchen, James Pearce, and Richard  Prisinzano. Methodology to Identify Small  Businesses and Their Owners, Table 6. Office of Tax Analysis, U.S. Department of Treasury, Washington D.C., August 2011. Available on-line at: http://www.treasury.gov/resource-center/tax-icy/tax-analysis/Documents/OTA-T2011-04-Small-Business-Methodology-Aug-8-2011.pdf.

Higher Education Equals Better-Paying Jobs

We all know it. The surest path out of poverty is a good job with benefits. But to get one of these good-paying jobs, Mainers need more education and training. To give low-income workers the skills they need, Maine must expand access to higher education.

The data are clear. States with lower levels of education have higher rates of unemployment and poverty. Yet Maine continues to fall behind many other states in educational attainment.

First, nearly 34 percent of Mainers ages 18 to 64 have only a high school diploma or equivalent; in all of the other New England states, more people have received some degree beyond high school.

Next, 24 percent of Mainers ages 18 to 64 have some post-secondary education, but no degree. The rate of degree completion in Maine is less than all other New England states, except Rhode Island.

Finally, only 35 percent of Mainers ages 18 to 64 have an associate degree or higher. Maine lags behind New England in rate of attainment for higher education.

Today, the vast majority of jobs that pay wages sufficient to support a family requires higher education. Without it, Mainers in low-paying jobs will stay there, relegated to working long hours, struggling to get by, and living in poverty. And we can no longer ignore that what is bad for our low-income families is also bad for the rest of Maine. It leaves employers without the skilled workforce they need, prevents businesses from expanding, and stunts our state’s economic growth.

For low-income working adults to succeed in higher education, they often need supports in addition to—and different from—those available to traditional students. Adult students with children to care for are hardest-pressed. In one state (Kentucky), the demand of family responsibilities was the most common reason given for leaving community college before earning a degree.

We used to understand this. Just five years ago, with bipartisan support, lawmakers put in place programs to address the barriers that working students face. But the governor and legislature have given these effective, and sometimes transformational, programs short shrift of late, such as:

Parents as Scholars (PaS) program: PaS helps Temporary Assistance for Needy Families (TANF)-eligible parents earn two- or four-year college degrees. It pays for support services that working parents need like child care, transportation, and occupational expenses. Thousands of Maine parents went back to school under this program, earning credentials, and getting off welfare. But enrollment dropped dramatically when legislatively-imposed time limits for TANF kicked in in 2012 and individuals lost their TANF benefits and with them their opportunity to finish their degree.

Competitive Skills Scholarship program (CSSP): CSSP provides grants to low-income students not only for tuition and books, but also for child care and transportation, which are critical for adult students to enter and stay in school. CSSP has the added advantage of being designed to educate students in high-demand careers like health care, computer technology, and library science and thus meeting Maine employers’ needs as well. In his latest budget this year, the governor has proposed cutting CSSP by a half million dollars.

Child Care programs: Maine’s Head Start and Child Care Subsidy programs ensure high quality child care that allows parents to work and go to school. Governor LePage and the 125th Maine Legislature cut $2 million in Head Start funding (taking over 200 children out of the program) and cut $2 million from the child care subsidy program (affecting 1,200 children).

Education is fundamental to higher wages and lower poverty. Unfortunately for working adults going back to school, the hurdles often prove too large to overcome. What’s more, the work supports needed for success either do not exist or fall to state budget cuts. Wise state policies and smart public investments like PaS, CSSP, and child care programs can remove barriers to education that will help low-income working families prosper.