Will Maine Use its Revenue Surplus to Lower Taxes?

Maine is among several states to have upcoming tax revenue surpluses. The state will receive this boon–to the tune of $822 million–over the next two years. Politicians, however, aren’t yet sure what they will use the money for. Since 2022 is a primary election year, this topic has become the center of attention for those hoping to keep their seats and hopefuls who want to oust current politicians from their roles.

Governor Mills Ponders Tax Surpluses

Maine’s Democratic governor, Janet Mills, is among those who have discussed the surplus funds. COVID-19 has created a political climate in which state governors can easily get approval for emergency actions. Mills has taken advantage of this, perhaps reducing the power of the state legislature in the process.

It’s likely that momentum will continue as Governor Mills pushes for measures to help those most impacted by increases in the cost of living, many of which are directly or indirectly related to COVID-19. The governor has specifically mentioned the cost of gas, both for transportation and heating, as a problem. However, she hasn’t fully outlined a plan, and critics argue that anything Governor Mills does propose is only a stopgap measure, and some residents will still wind up out in the cold. Columnist Matthew Gagnon of Bangor Daily News specifically criticized the effectiveness of solutions such as “gimmicky” one-time payments and government subsidies, which he believes the governor will employ based on her response to the COVID-19 pandemic.

Alternative Revenue Uses Include Bold Tax Cuts

Others have suggested uses for the tax surplus, which is a result of federal funding and not property taxes. For example, Nick Murray, a public policy analyst, has stated that this money could eliminate all income taxes for any Mainer making $50,000 per year or less. Those people would benefit most as inflation continues to push up gas, real estate, and household goods prices. Such a move would also greatly reduce income taxes paid by anyone who earns more than that and funnel more money into Maine’s economy, making this suggestion popular across party lines.

Although this proposal may seem bold, it’s not out of the realm of possibility. Nearby New Hampshire recently passed similar measures that cut business and property taxes while cutting interests and dividend taxes. The state was also able to shift more money to local governments, which will enable them to make improvements.

Opponents of these plans point out how they create longer-lasting change than simply cutting a check. Ostensibly, implementation will be easier than proposals with multiple components, too. All Maine needs to do is lower its tax rates for citizens, and let the influx of cash do the rest. Whether Mills will jump on the opportunity remains to be seen.