For state treasuries, the worst thing is probably not having enough money. No one likes cutting programs, but raising taxes isn’t exactly popular, either.

But, surprisingly, having too much money can also be a problem. Counterintuitively, politicians seem to quarrel almost as much about dividing up the spoils as they do in distributing financial pain.

Witness Angus King’s administration, where Maine’s independent governor presided over a surprise inflow of cash during the 1990s “dot.com” boom.

King didn’t want to create new spending programs, and poured money into state infrastructure, much to the displeasure of many legislators.

Expensive renovations of the State House and the Cross State Office Building took place, as did construction of a brand-new 1,000-bed maximum security prison in Warren — the latter perhaps not the best use of state dollars.

Now, Gov. Janet Mills is juicing spending on a broad front. With the federal government determined not to repeat the mistakes of the 2009-10 Great Recession, where inadequate aid prolonged recessionary effects, money has flowed. First with the bipartisan CARES Act, then the Democrats-only American Rescue Plan, the feds authorized $4 trillion to revive the pandemic-stricken economy.

There may be more. President Biden has proposed another $4 trillion, in two infrastructure packages — one for “hard” improvements in transportation and conversion to a “green” economy, the other for family support.

But there’s a crucial distinction. The pending bills will be mostly paid for, largely through bringing corporate taxes back a bit from historically low levels mandated under Donald Trump, and inching up income tax rates for the very well off.

Both the first and second phases hold lessons, and perils, for Maine’s state budget.

As it happens, Gov. Mills has a big state trove, $930 million for the current biennium. That’s the result of a better-than-expected bounce-back nationally, but also Mills’s judicious management of pandemic restrictions, and Maine’s reliance — progressives take note — on the income tax more than sales taxes.

Where Mills wants to spend is illuminating. The headlined proposal is $187 million to fully fund Maine’s 55% education aid requirement for the first time. There were congratulations all around for Democrats, but Republicans have a point when they worry about its sustainability.

There’s a reason Maine never before reached this lofty goal, whose origins lie in the 1980s, when new government spending, and local aid to reduce property taxes was a bipartisan mission.

Aid totals had previously fluctuated annually, but Republicans proposed the state commit to 50% state funding every year — much higher than in most other states. Democrats decided to top that, so 55% became the goal.

It was just a goal, though, not mandatory and — even in good budget years — the state never came up with the money.

Then came 2003, a new Democratic administration under Gov. John Baldacci, and a sweeping proposal, via referendum, by the Maine Municipal Association, to make 55% a “hard” target.

MMA negotiated with the new governor, who asked that the referendum be deferred so he could try to meet the goal through his own budgets. MMA refused, the voters agreed, and the mandate became law.

There was always something disingenuous about the MMA proposal. It could not be accused of feathering its own nest, since it chose school districts rather than, say, municipal revenue sharing for funding increases.

Yet when it came time to pay the bill, and various tax increases were proposed to actually fulfill the mandate, MMA was nowhere to be seen; it was the state’s problem, not theirs.

Baldacci attempted to reach 55%, announcing a “ramp up” over four years. Then came the Great Recession, and Baldacci — unlike his Republican predecessor in 1991, John McKernan — refused to request any general tax increase.

School aid went down, and plummeted during the LePage administration, where new tax cuts were the priority, sinking all the way below 45%.

Mills has tried to restore the upward trend, and the unexpected surplus has allowed full compliance.

Can it be sustained? History says otherwise; Maine’s revenue base has been shrunk by tax cuts over the past twenty years, and once the current federal aid is gone, we’ll be back to normal, at least in terms of revenue.

The only long-term way to maintain 55% school aid, which Maine voters seem to want, would be to make school budgets more efficient, which inevitably means reorganizing districts and how they provide services.

Mills seems unlikely to take on that task, but another governor might. There will always be a healthy appetite for the state paying local bills, but the continuing ability to do it will depend on much better ways of distributing the cash.

Douglas Rooks has been a Maine editor, commentator, reporter and author since 1984. His new book is “First Franco: Albert Beliveau in Law, Politics and Love.” Visit his website, douglasrooks.weebly.com/ or e-mail: drooks@tds.net

 

 

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