Imagine you’re in the voting booth, and you see the following question on the ballot:
“Do you support increasing taxes on families and businesses making over $200,000 a year, with the understanding that such a change would result in the loss of up to 4,300 Maine jobs in the first year?”
I’d guess the answer would be almost universally no.
Unfortunately, the voters of Maine approved just such a referendum question last fall, albeit worded differently.
It was close; Maine voters supported Question 2 by fewer than 10,000 votes. But the result will be an additional 3 percent surcharge on incomes over $200,000 a year in order to increase education funding. The argument, in a nutshell, was that we should stick it to people at the upper end of the income scale to pay for teacher salaries.
OPM is the Administration’s economic forecasting department. Unlike much of what Gov. LePage’s government produces, OPM relies on actual data to reach its conclusions. State Economist Amanda Rector and OPM Deputy Director Paul Leparulo presented the results of a dynamic economic impact study to the legislature’s Taxation Committee. The results show that between 2,400 and 4,300 jobs will be lost as a result of Question 2 just in the first year. And Maine’s Gross Domestic Product (GDP), a general measure of economic activity, will be negatively impacted by up to $160 million.
The report also shows that, after three years, Maine could lose up to 6,600 jobs from Question 2.
That’s the equivalent of Bath Iron Works shutting down.
To add to that, OPM shows that Mainers’ disposable incomes could be reduced by up to $800 million.
In other words, the 3 percent surcharge on higher income earners will be like kicking Maine’s barely recovering economy right in the kneecap as it’s trying to stand up.
The wave of referendums that hit us last year presented a number of serious problems that the legislature has had to address, and they’ve already made great headway on some of them.
The legislature managed to pass critical fixes to the marijuana legalization bill, which in its original form could have allowed minors access to pot. Senate Republicans also took the initiative to request a Solemn Occasion from the Maine Supreme Judicial Court to address the constitutionality of Ranked Choice voting, also passed by referendum last year. This means the RCV law will be tested before it causes a major disaster and umpteen lawsuits on election day.
And now legislative Republicans are leading the charge to deal with the fallout from Question 2. Instead of playing games with the budget, the GOP caucus is looking for complete repeal of this law. It’s going to be a tough battle. Republicans are going to have to be willing to offer some concessions to Democrats to get them to support a repeal.
But now that Democrats have seen the OPM report, and now that the people of Maine are learning the facts about Question 2’s real impact on our economy, it’s highly unlikely they will want to be on the wrong side of this argument. No Democrat wants to run for re-election on the “I tanked the Maine economy” platform.
There’s an axiom in Maine political circles that legislators seek to reverse a referendum at their own peril. While there’s logic to the idea that contradicting a majority vote might be politically dangerous, Maine’s history with referendums shows otherwise.
Since the Citizens Initiative was added to the Maine Constitution in 1908, we’ve had a total of 28 laws passed by this method. Of these, 67 percent have been amended in some way. People expect the legislature to makes changes to Citizens’ Initiatives.
The barrage of referendums last year was a clear rebuke of state government’s failure to act on these issues. But the people of Maine still expect the legislature to maintain vigilance to make sure the laws passed by referendum don’t cause unacceptable problems.
That’s exactly what Question 2 has created: unacceptable problems. Just like it was unacceptable for minors to have unfettered access to marijuana through Question 1’s flaws, it’s equally unacceptable for Maine to lose thousands of jobs as a result of Question 2’s flaws.
It’s going to be a grand negotiation, but there’s no doubt that this 3 percent surcharge on higher-income earners needs to be repealed. Republicans and Democrats will need to come together to find a way to fulfill voters’ expectations that education be funded at a higher level.
If the surcharge is repealed and education is funded properly, that will be a major victory for the Maine people. And it will be a sign our government, as well as our economy, is starting to recover.