Slicing our state dollars, part two

By Paul Ackerman | Jul 19, 2014

In last week’s column, an outline of the sources which fund Maine government, illustrated graphically that the state is dependent on the federal government for about 42 percent of our budget. The plain facts are that neither federal borrowing, nor Maine’s dependence on this source, are sustainable practices.

Here is a graphic look at where the state spends the money. Consider what the long-term effect to the entire state is to prioritize expenditures in this way, and remember — when you subsidize something; you are encouraging its increase, not decrease.

Three percent of expenditures in 2013 went to fund Economic Development & Workforce training, 6 percent Justice and Prevention, 3 percent Natural Resources, 23 percent to Education… and 52 percent funded Health and Human Services.

Health and Human Services, also known as DHHS, describes itself as follows:

“Providing integrated health and human services to the people of Maine to assist individuals in meeting their needs, while respecting the rights and preferences of the individual and family, within available resources. “

DHHS covers Maine with eight districts, Caribou to Kittery, and provides many people with services otherwise unavailable to them, largely due to their economic circumstances. There are a great many positive programs within this department, so any loss of funding from waste, fraud or abuse (as recently shown to exist in the EBT program) is most harmful to those recipients legitimately deserving of assistance.

The Medicaid program falls within DHHS, and in 2014-2015, the budgeted appropriations for that alone are 23.1 percent of DHHS funding.

Consider this: If, as part of the Affordable Care Act, Maine had accepted the federal funds for three years to expand Medicaid, how likely is it that we’d have fewer applicants to DHHS/Medicaid after the federal money runs out? Common sense indicates that if you subsidize something you get more of it, not less.

If Medicaid now consumes 21 percent of the DHHS expenditures, and we can’t truly afford that now, how could we afford 31 or 41 percent in a few years?

On the other hand, Department of Economic and Community Development, which gets a total of 3 percent, “serves as the umbrella organization to the offices of Tourism, Business Development, the International Trade Center, Community Development, Film and Innovation and Science. In addition, the agency administers the Made in Maine program, which is recognized worldwide for its quality and integrity.”

“At DECD, we are more than two dozen experts whose broad mission is to help communities and businesses prosper through a variety of programs providing everything from targeted tax relief to community block grants to tourism marketing. Whether your business wants to make a film here, bring a Maine-made product to market, expand an aquaculture project, or explore financing when moving a business to our state, our experienced staff can help.

DECD and its partners show companies how to benefit from millions of dollars in tax credits, reimbursements, R & D credits, capital loans, even direct investment. Every year, we help Maine communities attract jobs and grow their infrastructure with unique financing programs.”

If Maine allocated more funds to helping this department for a few years, could we improve more lives as well? Might we generate more employment, without expanding the bureaucracy, and increasing tax revenues?

You can’t spend the view.

The circumstances of our geography, along with the decline and regulation of traditional resource-based industries, leave Maine near the bottom of the economic ladder. Unfortunately, over-promising a “knowledge-based economy” or “creative economy” has proven unrealistic so far.

We need to improve the economic circumstances throughout Maine, and in part that means re-prioritizing what we can do with available resources. Focusing on improving the environment for employment in the private sector, not government, should allow a transition out of this cycle of dependency that Maine is stuck in currently. This is critical for the generation of our young people in high school and college.

Unfashionable as it may be, it is reasonable to predict that when state government drops from number one to the bottom of the list of top 10 employers in Maine, we should be well on the road to economic recovery. As long as it remains No. 1, we will be in an economic holding pattern.

The following sources were used in the two articles on Maine’ finances:

Maine state government website: Maine.gov

Agency mission statements

Comprehensive Annual Financial Report (CAFR)

CAFR 2013, Tables A-3 & A-4, sources of revenues and total expenses for governmental activities in fiscal year 2013.

Income tax figures and statistics from CAFR.

Note: In the CAFR, on page 10, Tables A-3 & A-4 are slightly angled color pie charts, which we felt were difficult to visually convey in a black and white format. In order to make the information more easily viewed, Daniel Ackerman carefully converted Tables A-3 and A-4 into the dollar bill graphic, which uses the CAFR information in a bar chart format.

The Office of the State Controller (OSC) is responsible for preparing the Comprehensive Annual Financial Report (CAFR) for the State of Maine. The contents of the CAFR present the State's financial position and results of operations, as well as certain demographic and statistical data.

Comments (2)
Posted by: paula sutton | Jul 22, 2014 07:49

Could Mr. Merriam please point out which part of this report is incorrect?  I would be curious to know which facts you are looking at this rebukes Mr. Ackermans research. 

 

I find the report and sourcing to be solid and based in reality with clear language and references to facts, not jargon and inflammatory phrasing that is so popular these days.



Posted by: Kendall Merriam | Jul 21, 2014 11:48

Voodoo economics..and misinformation...



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