Interview with Christopher St. John (10/6/09), TABOR II

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October 6, 2009

Christopher St. John

Christopher St. John is the executive director of Maine Center for Economic Policy (MECEP) and is an opponent of the Maine Tax Relief Initiative, Question 4, also known as TABOR II. Question 4 is scheduled to appear on the November 3, 2009 ballot. See also: St. John on Auto Excise Tax Repeal.

1. Since MECEP is an opponent of TABOR II, is TABOR a bad idea mostly in light of the current economic downturn of not only the state but the nation as a whole or is it a bad idea in general?

From our point of view, and we think this is a view shared by most scholars of prevalent spending, there’s the theoretical critique that budgets are not made by referendum. You need to balance the demand for services, the capacity to pay for services, and that’s what legislatures are for. That is representative government. We, here in Maine actually have experience with direct democracy in many of our towns that have a town meeting form of government. That’s what, from our point of view, is bizarre about a TABOR proposal, is that it imposes on top of the town meeting procedure in those towns that have it. The difference between the town meeting is that everybody has heard the arguments, everybody has a chance to hear what are you weighing. Whereas, when you go on the paper ballot its all by sound bite. You don’t have a careful analysis of the issues. So, from our point of view, that’s why it's bad as a theoretical proposition regardless of when its brought forward. It’s just a bad idea.

Historically, our revenues have been highly elastic. When the economy is growing, revenues grow faster than the economy. When the economy is slowing, revenues fall faster than the economy, generally. We think our public sources of revenue are in worse shape than the general economy now. We could be in better shape than the general economy when growth begins again. So, in our point of view, it makes sense to make use of that excess - that growth and revenue - to reinvest and reestablish the level of public services that were reduced disproportionate to the economy.

It takes time for its negative effects (of TABOR) to be seen and did in Colorado. But, in time it is designed to shrink government in relation to the size of the general economy. That’s the stated goals, that’s what they want to achieve. From our point of view, it doesn’t make sense to have the public sector ever smaller. You need both the private sector and the public sector. You need public sector investments in order to support private sector investments, from our point of view.

2. There have been a lot of comparisons to Colorado's experience with TABOR. Some argue that TABOR has failed in Colorado and others argue otherwise. What can Mainers take from that experience?

We look at the effects of Colorado through the lens of two different things. One, outcome measures like health care - the number of people covered, the number of kids covered - and k-12 investments - the ratio of teacher salaries to private sector salaries. And how measures like that sank Colorado in the rankings among states in the period between 1992, when they first adopted TABOR and 2005 when they voted to suspend TABOR. But, for us the crowning piece of evidence is the perception of Colorado voters, Colorado political leadership both Democratic and Republican and Colorado business leadership, that concluded that in the 12 or 13 years of experience it was a negative experience from their point of view and that's why they suspended it.

2a. Some argue Colorado has seen notable economic growth.

That’s true but what we say is that the growth is largely connected with geography and the fact that Colorado is one of a group of mountain states that is growing in population. Population growth often translates into economic growth; they go hand in hand. If you look at per capita gross state product growth during the years that TABOR was enforced, Maine’s was actually slightly better than Colorado’s. Now, because of so much population growth, their overall growth was faster than ours but slower than their peer mountain states. In other words, the average mountain state grew a few points faster than they did in the period.

The most important measure, we think, is that Colorado leaders and voters themselves recognize the harm done in K-12 education, in health care, in transportation – the 3 major things state government invests in.

The Maine proposal has some modest differences from the Colorado provision because the Colorado provision is written into their state constitution which makes it much more difficult for them to get out of it. The proposal here would just be a statutory change; so at least on paper it would be relatively easy for a subsequent legislature to just decide, “Oh that was a bad idea, we’re going to go back, we’ll get rid of it," but we think from a political point of view it’s quite difficult for legislators to vote against a system put in place by the voters.

2b. Although in 2005 Colorado voters approved a suspension of TABOR, didn't they reject extending the suspension in 2008?

It’s true that there was an effort to more completely repeal. It was on the ballot with a lot of other issues, as I understand it, along with very contentious issues between labor and business. That split the coalition that had supported Referendum C in 2005. At least, as I understand it, that’s when it got drowned out. The debate got drowned out by other issues on the ballot and didn’t have as effective a campaign as the Referendum C campaign because of these other issues. There’s been a recent poll of Colorado voters that say that 55% support for repeal of TABOR.

3. There appears to be a national movement towards implementing TABOR or limits on spending throughout the nation. Why do you think this is?

From our point of view, this is an ideological movement that is in search of success unrelated to the particular needs of the particular jurisdictions itself. From our point of view, those national forces view Maine as a target of opportunity because of factors that have much less to do with Maine than they have to do with the national ideology.

It’s a combination of looking for where there is discontent among voters about taxes and certainly, Maine is one of those places. More having to do with the fact that incomes are not growing in Maine. Gas prices have caused more damage to household budgets than have taxes. Likewise, health care increases, childcare increases, housing increases. There are lots of increases that people don’t feel they can do anything about. They can’t vote to reduce their gas prices, they can’t vote to reduce their health care prices. The one area they think they can vote to reduce is taxation. So that creates the right environment for the national forces that appear to be lending at least ideological support and maybe some financial support.

4. This week the Maine Heritage Policy Center launched an online tool to compare property taxes throughout the state. Is this a good tool to analyze property tax rates?

They lumped the period before 2005 and after 2005 as if there's the same thing going on. In 2005, the state legislature adopted spending limits, LD1s they are called, which set a limit on how fast property tax revenues could grow and the great majority of municipalities have stayed within those limits. So the rate of growth has been much slower since then than before. By mushing that together and ignoring that significant moment, we think they are frankly misrepresenting the challenge of property taxes. Historically, it is the case that Maine has relied more heavily on property taxes than any other states and that’s been burdensome on some Maine property taxpayers. Property taxes are very uneven in the state of Maine. And they are much more of a problem in some communities and much less of a problem in others.

They sited in their work, “Why is that Kennebec has inflated property taxes so much faster than Waterville?” Well, anybody that knows anything about Maine understands completely. Property values have gone up in Kennebec. They had population growth. They’ve expanded public services and education because of local decisions and they needed more services. They were able to afford more services because of the growth in property values and they needed more services because of the growth in population. Waterville hasn’t had either experience. They’ve had a decline in school enrollment. They’ve had a decline in population. So on and so forth. They present the issue without stopping for a minute to explain the obvious that those two towns are very different. A single formula that applies to the same in Waterville and Kennebec is just silly. It doesn’t make sense.

5. If Question 4 were to be approved, what does that mean for Maine? What would be the impact?

I think that in the short term, in the first year, you might not see any sign. It is likely that in 2011, just to pick an example, that revenues won’t rebound to the extent to even bump up against the TABOR limit. So it might not have any extreme visible effect in that way, with respect to the spending limit and with respect the general fund. But, with respect to the highway fund, it will immediately decrease the amount available because of the specific provision that repeals current law that has an inflation increase in the highway fund. That would have to go out to voters; to increase the gas tax even by that small inflation amount. I think it’s likely that the legislature would chose not to take the risk to send that out. So, that means an out and out reduction in the highway fund, which is already very clearly inadequate to meet the needs of simple road and bridge maintenance. It would increasingly cause restraint.

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