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Who pays for the tax cuts?
Mostly it’s the mentally ill, the disabled, the sick, children, and the poor

Hiding the cuts

I got onto the adjacent story about who pays for the tax cuts when I attended the Baldacci administration’s January 7 State House rollout of its budget for the next two years. His aides passed out a sheet with a pie chart that showed how the governor planned to close the "structural gap," the $700-million-plus shortfall between expected tax income and current-level state expenditures.

The pie chart showed a wedge, "Department Restructuring and Reductions," that filled about 68 percent of the gap. That’s about half a billion dollars. But Baldacci’s press release mentioned practically nothing about cuts and only a few words at the end about centralizing government operations to make them more efficient.

Instead, the governor bragged about improvements to the Maine economy under his stewardship, about the extra tax cuts he wanted to give businesses and citizens, and about some new spending he wanted to do, like $1 million for scholarships at community colleges.

When his major department heads held a press conference to explain the budget, I asked the finance and administration chief, Rebecca Wyke, to detail some cuts. She brushed me off. Another reporter followed up with basically the same question, but he, too, didn’t get an answer — just some fuzzy words about restructuring.

A week later, at an Augusta conference on the budget — sponsored by the Maine Center for Economic Policy — I asked Baldacci in front of several hundred people to explain some of the budget’s "reductions." As he hurriedly motioned to Commissioner Wyke to pass him some papers, he vaguely talked about slowing down the retirement of the state employees’ pension debt and "administrative consolidation" — finally, he said he would "defer to the commissioner" on the details.

She was up next. She gave me little more than before: "There is a reduced amount of spending, yes, but most programs are increasing." But she admitted that MaineCare (Medicaid) would be hit.

When the new House speaker, Democrat John Richardson, was behind the podium, I asked him the same question about the cuts. He said he hadn’t looked at the budget closely. "I’m not giving you a very good answer," he confessed.

(To be fair, by the end of writing these articles, on Tuesday, January 25, I have not found a legislator who has looked closely at the budget. They have been attentive to tax cuts. But it is no easy matter to tackle the massive budget bill without guidance. It is 711 pages long and presented in the worst bureaucratic accounting language I have ever seen. See for yourself at http://www.maine.gov/budget/fy0607.htm.)

At the conference, I sought out several advocates for the mentally ill and mentally handicapped. It turned out that they had begun inspecting the budget, and they were finding huge cuts that would affect their clients. I made appointments to call them, and I made an appointment with Jack Nicolas, Health and Human Services commissioner, to go over the "restructuring and reductions" in his department’s budget.

A week later when I went to DHHS, I found I had been palmed off on a deputy commissioner, J. Michael Hall, a pleasant former Vermonter who spoke volubly in an impressive bureaucratic language. He tended to give a positive spin to every department action. Yet he and the department’s press person Mike Norton did reveal the crucial fact that the budget contains $140 million in DHHS cuts, and they had a ream of documents specifying them.

The documents are, of course, written in obfuscating lingo. Here is a description of one cut to "Children’s Behavioral Health Services": "Reduces funds from the redesign and implementation of targeted case management through utilization review and capitation." That is a $1.8-million reduction in services for mentally troubled kids.

Later, across the street in the State House, I asked Lee Umphrey, the governor’s chief press aide, to help me get Commissioner Wyke to explain the budget cuts. As usual, Umphrey was friendly, and he put Wyke in touch with me.

In two conversations, she explained some points of the budget, and she thoroughly convinced me of Baldacci’s commitment to Republican trickle-down economics.

Over the weekend, as I continued talking with mental-health and mental-retardation advocates, one of them, Mary Lou Dyer, a lawyer with many years of experience as a lobbyist, exclaimed: "I’m pulling my hair out. This budget is impossible to understand!"

On Sunday, I talked with Peter Mills, the Republican state senator and budget expert. "It’s very difficult to read the budget in its current format," he confessed.

He bemoaned that there was no "responsible summary" of the cuts, noting that it was in the administration’s "political interest to keep the cuts under cover as long as possible."


— LT

As you know, there is no free lunch.

So who pays for the $247 million in extra state school funding over the next two years — so that towns and cities can cut property taxes — that the Legislature enacted and Governor John Baldacci signed last week amid an orgy of self-congratulation?

So who pays for the $34 million in additional tax cuts Baldacci intends to give citizens and businesses in his new two-year budget?

Somebody has to pay.

It won’t be the rich or the corporations. By bipartisan consensus, our politicians are not proposing anything like making the income tax more progressive or eliminating big-business tax breaks such as BETR, the Business Equipment Tax Reimbursement program, which is expected to funnel $153 million from the state’s treasury to corporate treasuries over the next two years. Indeed, Baldacci’s budget serves up a new $764,000 tax break specifically for the Bath Iron Works.

And it won’t be the majority of us who will pay, since Baldacci has adhered like Bondo to his no-tax-increase 2002 campaign pledge. His fellow Democrats, who control both legislative chambers, support him in this promise.

Who will pay? The poor, the sick, the mentally handicapped, the mentally ill, and other unfortunate people, many of them children. They will pay.

The few professional advocates for these unlucky but numerous Mainers (300,000 are on Medicaid each year) have just begun calculating what the governor’s 2006-2008 budget holds for the people they represent. They do not like what they see. While their analysis of the complicated, difficult-to-read budget bill may reveal much more in the coming weeks, two big points already seem clear:

1. Baldacci wants to dramatically slash services for mentally ill people, mentally handicapped people, and the care of foster children. These reductions are largely contained within a mammoth $140-million series of cuts proposed for the Department of Health and Human Services (DHHS).

2. As part of his DHHS cuts, Baldacci is proposing to shrink MaineCare benefits for tens of thousands of poor people. (In Maine, Medicaid, the government-run health-insurance program for poor and disabled people, is called MaineCare.) The administration believes that MaineCare benefits for many of the poor should not be more generous than those provided by his new Dirigo Health insurance. The ultimate reason for this cut, state officials say, are rising MaineCare costs. The proposed cut is a reversal of the expansion of MaineCare coverage begun, under Democratic legislative leadership, in Angus King’s administration.


"It’s really serious," says Mary Lou Dyer of the proposed cuts to programs for mentally handicapped people. "I’m extremely concerned."

Dyer is director of the Maine Association for Community Service Providers — groups like Goodwill Industries of Northern New England that serve people with mental retardation, developmental disabilities, and autism.

One cut, she says, hits about 2600 disabled adults living in four-person, two-person, or one-person apartments or houses. Some of them work in "supported" employment.

"They couldn’t have a job without a job coach," she says, and under the cut they would lose the coaching and the other assistance that allow them to live and work in the community.

"They could be God knows where — in an institution?" she asks. "These are people who really want to work, and they may not be able to any longer."

She believes that if this cut gets through the Legislature, state government might be jeopardizing its compliance with a 1994 court order to place mentally handicapped people in the community with adequate supportive services. This "consent-decree" community-care system replaced, in 1996, the abusive state Pineland Institution for mentally handicapped people in Pownal. The cuts total $28 million in both state and federal funds, she says. The feds match state money two to one.

Dyer has uncovered other cuts in Baldacci’s budget. For example, one is to the education of preschool kids with disabilities, a $6.5-million savings to the state Department of Education. Then there is $644,000 saved by eliminating the DHHS’s Committee on Transition, which helps disabled teenagers move from schools to jobs.

Ron Welch, executive director of the Maine Association of Mental Health Services, has a similar take on the Baldacci budget.

"Over the course of two years, with all the state money and the federal match included," he says, "there’s a $78-million cut" to services for the mentally ill people whom his agencies help.

He likes some elements of Baldacci’s plans. The state would give social-service agencies lump sums instead of regulating details of how individuals are served. This change gives more flexibility to the agencies, he says.

But other proposed changes bother him a great deal. For example, the state is "redefining who has severe mental illness." This redefinition, he says, results in a $4.5-million cut in services over two years in state and federal funds, "plus around $800,000 lost just in state funds because some people will no longer be MaineCare eligible."

What will happen to mentally ill people who are dropped from these services? Many of them, he says, are leaving jails and homeless shelters, both of which he describes as "already in a near-crisis situation." Then they will "get backed up in the community hospitals," if they are not properly cared for.

Welch also has identified an $8-million cut, not counting the loss of federal matching funds — counting them makes the reduction to social-service agencies really about $24 million — in community-support and residential-treatment services.

Taken in the aggregate, these cuts, he says soberly, "challenge the ability of the state and the providers to meet their responsibilities to mentally ill people."

These are only excerpts of a lengthy story. Foster parents of severely handicapped children have already publicly protested another budget proposal. They would see their DHHS reimbursement drop, in some cases, from $75 to $45 a day. This cut would save the state $1.3 million. Only last year, the state cut these reimbursements. The state has 2750 children in foster care, and 57 percent qualify for therapeutic-care compensation.


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Issue Date: January 28 - February 5, 2005
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