Republican radio address

For the weekend of October 17-18, 2009

Greetings, this is Josh Tardy, leader of the Republicans in the Maine House.

You’ve probably seen the news in the past few days that the recession is over. Economists say that we have seen the worst of it, and we can expect a recovery to begin very soon. We all hope they’re right. This has been the worst recession since the Great Depression. Millions of Americans are out of work, two million houses have been foreclosed, and the federal government has thrown trillions of dollars into the economy to stave off a total collapse. Our children and their children will be paying it back for generations.

If the economy has turned the corner, it didn’t leave any skid marks. Here in Maine, unemployment stands at 8.6 percent. The Department of Labor is sending out 30,000 unemployment checks every week, but officials say the real number of unemployed is more than 60,000. Some people have already exhausted their benefits and 9,000 others will run out of benefits in January. Many of our unemployed will turn to Maine’s welfare system to survive, but that safety net is already under enormous strain.

The recession’s impact on the state budget has been profound. The two-year budget that started on July 1st was already $500 million lower than the previous budget, based on predictions that revenues would fall dramatically, especially in sales and income taxes. Unfortunately, they have fallen even more than expected. In September alone, revenue was down $28 million. The governor is expecting continued bad news on the revenue front – so bad, in fact, that he has ordered another $200 million reduction in state spending. State agencies have been asked to recommend budget cuts. When the Legislature convenes in January, it will face the unpleasant work of a supplemental budget.

Obviously, legislators will look for spending cuts that do the least harm to essential services. There are two parts of the budget that combine to form 80 percent of total state spending – education and health and human services. Under the new budget, spending for K-12 education is already scheduled to drop by $45 million next year, which works out to a cut of about 5 percent from this year. Homeowners most likely will see their property taxes go up to cover that gap.

In the health and human services sector, we’re talking primarily about MaineCare, the state’s huge Medicaid program. It provides free medical and dental care to 270,000 residents, making it one of the largest Medicaid programs in the nation as a percentage of population. We could eliminate the $6.6 million we spend every year to give heroin addicts free rides to methadone clinics, but major reductions in MaineCare spending would have to involve eligibility levels. That’s problematic because the state took stimulus money for MaineCare, and one condition was that eligibility levels cannot be changed. The stimulus law has put us in a straitjacket regarding the one program where cuts will have to be made sooner or later. We are spending more than $2 billion a year on MaineCare, and that is just not sustainable in a state with a stagnant economy and relatively low incomes. As British Prime Minister Margaret Thatcher once said, “The problem with socialism is that eventually you run out of other people’s money to spend.”

There are good opportunities to cut state spending, however. Many programs have grown like weeds over the decades, untouched by effective management. We know, for example, that Maine has 46 individual economic development programs stashed throughout the bureaucracy. They were examined last year by the Legislature’s non-partisan accountability agency, OPEGA, and the findings were shocking. Between 2003 and 2005, these programs spent more than $600 million. The OPEGA report stated that the majority of these programs lack standard controls necessary for performance evaluations, such as adequate purpose, goals and objectives, and performance measures. Not only do these expensive programs lack performance evaluations, they make no meaningful effort to coordinate operations. That’s a direct byproduct of shoddy management. Some of these programs have been operating the same way for 15 years, steadily siphoning off tax dollars like a broken water pipe.

Another ripe target is the failed Dirigo Health program, which has hit taxpayers for $155 million and insured only 3,400 people who previously lacked insurance. That’s less than 3 percent of the original goal. We were promised that the program would not require tax money, but the Legislature recently approved a 2.14 percent Dirigo tax on all medical claims paid. That is basically a tax on doctors’ bills, which will drive up private insurance premiums.

There are countless examples of dubious state spending. We will need to look at these all things and more to survive this challenging economic situation.

This is Josh Tardy. Thank you for listening.