| By Commissioner Rebecca Wyke
For all the folks out there saying the
answer to all of government’s ills is to run the state more like a business, I’m
here to say, "We are." When business types get together they think in terms of
"strategic investments," "business plans," and "operating
capital." They arrange their operations to minimize overhead so they can devote more
of their resources to doing what it is they are in business for, and they work to create a
little savings to get them by when business is slow.
Just a few short years ago, the business of
the State of Maine was in a shambles. Money wasn’t coming in as expected and we
couldn’t pay our bills, so we drew down our savings to zero. When that wasn’t
enough to keep our doors open, we took out a short-term loan. But despite these efforts we
still couldn’t make ends meet. Just about anyone who’s ever been in business
knows the significant responsibility that comes with making payroll and meeting your
commitments to creditors. And as a small business owner, Governor Baldacci was no
different. He recognized that this was no way to run the state. So, as he began his new
administration, he set out to rebuild the business and to make sure that appropriate
practices were put in place, so we didn’t end up here again. That was just three and
half years ago.
Today, Maine has rebuilt its savings
account from zero to $149 million, just $5 million shy of our reserves at their highest
peak. We’ve also paid back that short-term loan to the tune of $275 million. We
trimmed back our overhead, eliminated redundant services and reduced the size of the state
workforce by over six hundred positions. We closed a $1.2 billion shortfall and kept the
state’s budget in balance with its resources. The best part is we did it without
raising our prices, er, I mean, taxes.
Our business plan was simple. Set a
reasonable price for our services so customers will feel they’re paying a fair price
for what they’re getting. To do this we set out to manage expenses within current
revenues and committed to not raising the state’s sales or income tax. At the same
time we determined to set aside any extra money that came in for a rainy day. Translated,
it means we put in place the state’s first spending caps to ensure that the
state’s budget didn’t grow faster than the incomes of our citizens. On average,
the state’s budget has grown just 3.5 percent, while the personal incomes of Maine
people are growing at 4.3 percent. We also made a strategic investment, by pumping nearly
$280 million of state funds into K–12 education to reduce the pressure on the local
property tax. Together these two efforts have begun to drop our combined state and local
tax burden, helping over time to bring taxes in line with what Maine people can afford.
And we created stronger laws to protect our Rainy Day Fund. Instead of spending surplus
revenues, we set them aside as savings for the future. The buildup of our savings also
improved our operating capital, or cash on hand, enabling us to pay off that
quarter-of-a-billion-dollar loan.
Consistent with Governor Baldacci’s
promise of four years ago, we’ve restored the business of Maine to its former state
of health prior to the recession. But our work is not done. We’re still working to
bring all the various divisions of the company in line with our business plan, and
occasionally we still find some old bills stuffed in a drawer that need to be paid, like
the debt owed to our hospitals. But we’re making progress on all fronts; for example,
last year we paid the hospitals $96 million to cover bills dating back over a decade.
Like business, government should be run
efficiently to maximize the return to its investors, the taxpayers of Maine. But it’s
also important to remember that we created government to do for us collectively that which
we cannot do for ourselves alone. To preserve our environment, protect our families,
arbitrate our disputes, educate our children, and care for our most vulnerable citizens.
That’s a business that operates 24/7 and never rests. It’s good to know we have
the reserves to keep it going.
About the author: Rebecca M. Wyke is the commissioner
of the Department of Administrative and Financial Services. Previously Wyke served eight
years as the chief deputy secretary of state. At the Department of Administrative and
Financial Services, Wyke oversees nine bureaus and over 1,000 employees. |
