Minority leader Rep. Emily Cain on LePage’s plans and how Democrats are fighting back
BY RAMONA DU HOUX
April 8th, 2011
Gov. LePage is pushing a national agenda in Maine, which is not what voters mandated. As governor, isn’t it one’s duty to focus on the issues pertaining to all the people of Maine?
Democrats are very focused on what’s happening in Maine. We aren’t getting sucked into the National rhetoric that is coming from a lot of states where Republicans have recently taken control of the governorship and the Legislature.
Wisconsin is an example. We’re dealing with pension issues, as they are in Wisconsin. But we are not dealing with the threat of undermining and eliminating collective bargaining —right now. We want to make sure that we keep the issue focused on: What do we do to make sure we manage the pension liability in the state of Maine? And not turn that in to a platform on which to assault the underpinnings of employees and collective bargaining. We are trying to be thoughtful and distinguishing about that.
Another example is a “right to work” bill that has been proposed. We don’t have a problem related to that issue in the state of Maine. So why are we going to try and bring a national solution to a problem that Maine doesn’t even have?
As we look at the budget — the proposals coming from Republicans that seem to be related to a national conservative agenda — Democrats are remaining focused on Maine, the facts about Maine, and the impact on the people of Maine.
The unfunded liability (UAL) began back decades when it was decided that public workers should see modest increases in their pensions and benefits, but the lawmakers at that time didn’t have a funding plan to pay for the measure. Since then the state has worked with stakeholders and has a funding stream that is paying off the UAL, but the LePage administration says it’s in crisis. What are the facts?
Our system was built to recover over a ten-year period. But in the long run, over that ten-year period we’ve had three major downturns; the last was the recession that sent stocks tumbling. When we look at the percentages on this upcoming budget, of the $287 million $281 million is related to market downturns.
I agree we have to work on a way to make sure the liability is paid off by 2028. A lot of that is just maintaining our track record of making payments on time and doing investments responsibly and trusting the work of the Maine Employment Retirement system board.
The money that is in the public retirement system today is more than $10 million; even if we never paid another cent, right now, we could still pay out the benefits we need to for several years to come. But we know that wouldn’t be responsible, because the pension system is built so it has resources going into it that effectively pay for it.
Where I think the budget takes it too far — is the governor is extracting funds on the backs of public employees to pay for spending in the form of tax cuts, mostly aimed at higher income brackets. There are several proposals related to bonus depreciation or devolving the estate tax exemption. These cuts are not going to help any of the people who are paying for them.
It’s a shift. It’s not solving our problem. It’s just moving resources from one place to another. There should be a reasonable discussion that can be had away from the negative rhetoric around public employees. It’s a distraction from the fact that we have an investment situation we have to focus on.
We should not use the rhetoric to somehow blame current public employees. They are dedicated workers. We shouldn’t say it is their fault — it’s the fault of the market.
Gov. LePage has stated Maine is, “bankrupt.” Is that true?
We are not going bankrupt, by any means. There is a lot of negative rhetoric out there that is being used to shake up a “crisis” but it’s a false crisis. When you look at the debt numbers that the governor and the Treasury use, it’s not a fair representation of debt.
They lump together “pension liability,” which is not money we’ve borrowed, with “general obligation funds,” which is money we’ve borrowed that has been approved by the people, with “moral obligation debt,” which is debt that has a guaranteed revenue stream like student loans and mortgages.
They’ve put all of those things in the same basket and said Maine has a debt problem —
that is irresponsible.
What are the consequences of all the misrepresentation of the state’s finances?
We are afraid that what will happen is that the projection of the state economy, spun in this negative way, will have a ripple effect that will lead to no one wanting to invest in Maine.
So when we look at the pension system, we absolutely have to deal with it. But let’s deal with the reality of it. Let’s not hype it up with other rhetoric about debt that isn’t connected or true.
I’d like to give credit to the Appropriations Committee for really trying to lower the blood pressure of this conversation, despite efforts from others to raise it. The bipartisan approach of the committee, as taken at the public hearing, has helped bring more facts to the forefront.
We are talking about people’s livelihood here. The fact that they have worked decades in jobs and have paid into a system — to then have the terms changed as they are heading out the door is simply not fair. It’s not right.
The rhetoric says that public employees get huge benefits. What’s the truth here?
The fact is, people who are paying into social security are paying it at a lower percentage rate than public employees do. The fact is, the employer contribution is higher by the state than it is into social security. And public employees don’t get benefits at all from social security.
The private sector pays less out of their paychecks and their employers are paying less.
The average pension benefit is under $20,000, or about $375 a week. That’s not the lap of luxury.
To balance the budget and pay for tax cuts on the backs of people with these fixed incomes is unfair.
But I’m optimistic that during the appropriations process we will be able to get to the reality and the human impact of these proposals and make necessary changes that both address the financial side while minimizing the harm to people.
As you said, the administration mixes in the “moral obligation bonding” with other debt. These are specialized bonds which have always been paid for by the agency or business requesting them. Maine State Housing, hospitals, colleges, banks, and others use this bonding. Is it fair to stop this bonding?
History tells us this is not a problem. The facts show us that these opportunities for investments — in hospitals, education facilities, student loans, business loans, etc. — are needed for our infrastructure, education, and jobs. They are always paid back.
This is an area where it seems they are trying to cause a problem in the name of trying to ad to the false “crises” around debt.
It’s unfortunate. It’s not good to hold up job creation, infrastructure improvements, and the abilities of entities to carry out the mission the public expects them, to cover something that is not a problem.
To hold up the ability of these entities to function properly will have long-term impacts that are negative to the state’s economy, that fly in the face of any message of economic development and job creation.
Governor LePage has stated that he will veto any budget that doesn’t include his major proposals. Is that wise?
It’s just silly to talk about a veto of a budget that isn’t even out of public hearings. The budget proposal is meant to be a starting place. We have an established outlined process. It goes from the proposal to the appropriations committee where the public weights in, experts weigh in, and revenue forecasts change. There is no budget document that leaves the same way it came to the Legislature.
To say he will veto it does not help either side, particularly when you are dealing with a budget that has such a human impact. It undermines the work of Republicans and Democrats.
This budget will be a marathon not a sprint. I guarantee you we will still be working on it in May.
Did Governor LePage testifying about his budget make a difference?
I think John Reed was the last governor to do that, but I wasn’t alive then. Testifying on something we know he already supports — it’s his budget — doesn’t change the dialogue. I’d rather have him work with us to get to a solution we all can embrace.
What in the LePage budget proposal worries Democrats the most?
We are very concerned about the pension piece; pension changes, retiree health changes, and state employment health changes, as well as the early retirement program.
We are worried about the integrity of state government and it’s ability to function. If the early retirement goes through as it is, that, combined with the changes in pension, will lead to huge numbers of people leaving sate government and state government not being able to function at the level people expect.
We are worried for citizens who can’t afford defense and access to justice.
The Fund for a Healthy Maine is a tool that prevents people ending up in the corrections system. It helps them with substance abuse, tobacco cessation, with being healthier, being able to thrive in schools. The best way to save a dollar is to invest in prevention. That’s a core value we stand for.
We are worried about Maine’s vulnerable; People who use TANIF —Temporary Assistance for Needy Families. The governor has provisions in there related to drug tests, related to time limits, related to access for legal non-citizens.
Maine is a model state for the way we purchase prescription drugs, with the Maine Rx program, but the governor wants to eliminate the program.
We are concerned about how much reimbursement will be going to communities for general assistance, which is the last line for many families across Maine. We need to prevent them from suffering foreclosures and ending up homeless. We have to make sure that the safety net is in place and that it is something our municipalities can continue to afford.
The hits to substance abuse in this budget are scary. It will lead to more people in the corrections system. There are numerous providers that may close if changes aren’t made.
These are all concerns about the people of Maine and their quality of life, and their ability to thrive.
On a more technical side —
We are concerned about the lack of funds for debt service in the budget, to even have a conversation about bonds won’t be possible without change to that. On the tax side, we are very concerned about the structure of the $200 million tax cuts; specifically we’re looking at who’s really benefiting.
Democrats have an established record of standing up for lowering the income tax. In recent years we have made sure to always do it in a way that is revenue neutral — so no one got hurt.
In this budget the tax cuts are being paid for by changes in the pension system, and that’s not fair. Tax cuts that benefit a small number of people at the expense of people who don’t benefit is wrong.
We’re concerned about transportation funding. The governor shifts $20 million to the highway fund but eliminates indexing on the gas tax. We know Maine’s roads are in trouble, but those changes combined with no bonding will make our infrastructure gap grow.
We need a bond package that focuses on a large number of roads and bridges. That’s the only way we can meet Maine’s infrastructure needs without falling behind.
Is there any job creation in this budget?
We haven’t seen anything that focuses on job creation from the governor. We talk about the potential of job creation with the rhetoric about the tax cuts creating jobs. But there is no meaningful data that show that theory works. In fact there is the opposite.
Better investments would be in economic development programs, support for small business, support for educational institutions, and support for research and development.
The construction industry in Maine needs more work. This is an opportunity not only to have that work be available but have the work be done in a way that benefits most people and allows industry to grow, through investments in R&D, roads and bridges, working waterfronts, and farmlands, and energy.
LePage has a new committee that will meet in secrecy, because he is breaking the Freedom of Access Act, is that right?
The governor is undermining the credibility of whatever this group is by taking the public’s ability away to observe, participate, and react. It’s counterintuitive to me for a governor who says he wants more open government to work behind closed doors — in secret — talking about important issues that the state of Maine faces. It means that no matter what this group puts together, it will always be taken as suspect.
According to a Portland Press Herald article, a thousand teachers may take early retirement, because if they don’t they will have to pay for their healthcare, if this budget passes. Where’s the logic in LePage’s budget?
It’s dangerous if that many teachers retire and leave the profession all at once. The ripple effect would be crippling to a lot of schools, communities, families, and the workforce across the state. This is an example of where the numbers may balance on paper, but the human and community impact is completely out of whack. In the next ten years, we are going to have a problem educating our children, because we have an aging teacher population. To do something to incentivize teachers leaving the classroom is bad for kids. We want new teachers there because it’s a great, honorable profession that they love, because they love kids. We don’t want people staying, leaving, or coming because of financial reasons. That’s just not a good basis to have a positive educational environment.
What tax proposals would you make?
Democrats are open to talking about appropriate, targeted tax cuts. We’d like to see more investment in the Circuit Breaker Program — so that tax refunds get to people who have property tax problems. We’d like to see more use of the Earned Income Tax Credit that affects and benefits low-income people. We would like to see the income tax lowered, but not on the backs of people on fixed incomes.
You can have tax cuts that benefit economic gain. The governor’s tax proposals are only a way to perpetuate wealth and expand the social gap, as opposed to helping people in all walks of life.
How are Democrats doing as a minority party?
In some ways we’re fighting harder than we did before, because we are not controlling the schedule of events. I’m the first Democrat to be the minority leader in the House since the early 1970s. We are constantly playing defense on the things we care about and at the same time playing offense to try and move forwards. We can’t afford to move backwards on health care, wellness, and the Fund For Healthy Maine, access to affordable health insurance, or the implementation of the Affordable Hath Care Act. But the reality is we don’t have the Blaine House. We need Democrats across the state to be speaking out and working with us. This is an opportunity for us to hit the reset button and reengage and reemerge in 2012.