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"Thinking Beyond Paul LePage"

10 Problems with the LePage Budget


# 1: The LePage budget will result in tax savings averaging $2,770 for those with incomes of more than $363,000. For those earning $28,000.00 to $48,000, tax savings will amount to a whopping $83.00. So if you are wealthy get a all-expenses paid Jamaican holiday for two. If you are middle class, you get to drive to Kittery and back, but bring extra for tolls.

# 2: Adjusted for cost of living, Maine teacher pay ranks 47th in the nation, yet the LePage budget would effectively reduce the take home pay of the average teacher by $900.00 per year. Most teachers will teach 3 years longer and will receive substantially reduced benefits when they do retire.

Retired teachers now receive on average $18,000 annually in retirement, the majority of which is based on funds teachers pay in. The current state contribution is less than that paid into social security by private employers. LePage proposes teachers pay nearly 10% of their modest earnings into retirement. These earnings are subject to state tax; participation in the system is mandatory; and teachers are ineligible for social security.

Why hit teachers? Teachers and teacher unions are a convenient target. To weaken teachers unions is to weaken the Democratic party. We're betting LePage wants weaken public schools to pave the way for a charter schools and a private school voucher system.

#3. Zeroing out cost of living increases for 3 years and then capping them at 2% devalues the retirement income of every teacher and state worker. Tilt the playing field that much and those folks never get back to level.

If inflation rates of the last 20 years continue, teachers and state workers retiring in 2014 will start out receiving less than 90 cents on the dollar as compared to what they have a right to expect. By the 10th year of their retirement, because of the 2% cap, they will receive less than 75 cents on the dollar. In fact, with state contributions less than 30% if the retirement pie, it is not difficult to imagine a high-inflation situation where the state's contribution is so small as to be inconsequential.

This isn't a retirement plan; it's a plan for destitution.

#4. So how will these millions of dollars snatched out of the hands of state workers and retired teachers be used? Will they go to provide healthcare for impoverished children? Will they be set aside to stabilize the retirement fund for the future? Will they be used to improve Maine's bond rating -- currently AA2 -- a strong rating? Not exactly. The additional funds will be used to redress a matter of much greater urgency -- to increase the estate tax exemption to $2 million and to lower the top income tax rate from 8.5 to 7.95 percent. So . . . taking from the middle class to give to the rich! Robin Hood in reverse.

#5. The LePage budget cuts by 20% the Circuit Breaker Tax Refund Program that reduces property taxes that benefits low and middle income families and especially elderly folks on fixed incomes. Property taxes are generally considered regressive in that they require low income residents to pay a much higher proportion of their income than wealthier tax payers. So why would LePage want to cut this program? You guessed it, to provide tax breaks for the rich.

#6 The LePage plan is based on the delusion that if we eliminate regulations and lower taxes, businesses will flock to our state. A study in Fortune Magazine found that corporate tax breaks do not create jobs or lead to higher wages. More to the point, Maine does not need to out-Dakota South Dakota (home of $0.00 corporate taxes) nor should we try. BMW does not compete with the Ford Focus and does need to try to match their pricing. The Maine brand is based on quality environment and quality of life. Businesses that have a semblance of social and environmental responsibility will be proud to "buy in" to what Maine is and what Maine has to offer. Let's maintain our good schools, our our vibrant arts community, our social services, and our quality environment. And let's go find those businesses who have similar values. Interestingly, Maine has already climbed from #43 (in 2006) to #31 (in 2011) in the State Business Climate Tax Rankings, though LePage and his band of tea-drinkers will tell you otherwise.

#7 The LePage plan to reduce teacher retirement benefits and increase retirement age has a hidden cost that no one is talking about. Teachers retiring 3 years later at age 65 will lead to decreased costs to the state but increased costs to towns -- and thus to those paying property taxes. An RSU in which 10 teachers delay their retirement by 3 years could see the local tax burden rise by $600,000 over the 3 year period. This is due to the fact that the district is not replacing teachers at the top end of the salary scale with starting teachers making $30,000 per year. This LePage sleight of hand looks good to the uninformed, but the real result to Mainers may well be be increased taxes.

#8 The LePage Budget hits Medicare: "About 25,000 seniors will lose all or some support they currently receive in paying their premiums, co-payments and deductibles for Medicare parts B and D, as well as the cost of prescription medications." (BDN, 4/8/11). Anyone think our seniors can afford to pay more for healthcare? Write to LePage and tell him so. He'll be glad to hear from you.

#9 Like too many politicians, LePage has been bought. Donors to his campaign included: drug companies such as PhRMA AstraZeneca; Glaxo-Smith Klein, Pfizer, AMGEN, and DAINCHII SANKYO of Japan, the Corrections Corporation of America, for-profit social services agencies such as Maximus, K12 Management (charter schools), and Preferred Care Partners (Medicaid), the Bottled Drinks Association, The Michigan Chamber of Commerce (??!), military contractors such as Demmer Corporation and EADS North America. Most of us would find it difficult to think clearly when beholden to these corporations and their interests to tune of millions of dollars. But Paul LePage doesn't take time for special interests, so we're ok, right?

#10 Allegations that he is a lackey for the Koch Brothers and ALEC aside, LePage has very little in his background to prepare him as a visionary of massive change. LePage's approach to the budget is more ideological than pragmatic. And where did this ideology come from? It strikes many as more imported than Maine grown, more autocratic than democratic. Do you trust changes that originate like this? I don't.