Janet Mills is kicking small businesses when they’re down

By Matthew Gagnon

Imagine for a moment that you are on a boat in the middle of the ocean. The sea is angry, and your boat rocks violently back and forth, tossing you around like a rag doll. During one particularly nasty assault of crashing waves, you are tossed overboard. Now you are adrift in the ocean, and without help you will surely die. 

Luckily for you, there is another person on the boat. The life saving ring is tossed overboard in your general direction, and makes it to you. The sea is swallowing you up still and the ring is much too small, but it does keep you from sinking so that hopefully your friend can paddle in your direction and you can crawl back onto the boat.

It barely works, you are swallowing water, and you won’t last long. Your head drops lower and lower, and you are growing tired. Suddenly, you see the boat nearby and a hand reaches toward you. As you grab it, you are pulled up just high enough so that you can cough out the water in your lungs and take a desperately needed breath. 

As you look up thankfully, your friend quickly extends their other hand in impatient expectation. “I’m going to need your wallet,” they say. 

This story isn’t about a boat in the ocean, of course. Our man overboard in this story is the Maine small business community, the lifebuoy is the Paycheck Protection Program, and the greedy rescuer is, of course, Gov. Janet Mills. 

This all relates back to the recently proposed budget and its $8.394 billion price tag. You will note that this budget is roughly $400 million more than the governor’s first budget, which ended up being $7.98 billion. That budget raised state spending by about $800 million dollars. All told, Mills is looking to fund government by about $1.2 billion more than Gov. Paul LePage’s last budget just three and a half years ago.

That grotesque spending growth stands in stark contrast to the decisions made by another Democratic governor in a time of financial crisis. In 2009, in the wake of the Great Recession, Gov. John Baldacci signed a $5.8 billion dollar budget, which represented a $500 million dollar reduction from its predecessor. Yes, I said reduction.

You might be wondering how Mills is pulling off this sleight of hand. The answer, as we found out this week, is that the Mills administration has made the decision to not exempt PPP loans from state income taxes, as the federal government has wisely chosen to do.

This decision to not fully conform with the federal tax law will allow the state to collect $100 million in additional revenue, which Administration and Financial Services Commissioner Kirsten Figueroa says is necessary to balance the budget. According to Figueroa, this is ultimately the federal government’s fault, for not bailing the state out with additional aid money. 

However, as the governor herself pointed out in her initial press release that announced the budget, more than $7.6 billion of federal pandemic relief has already been delivered to Maine. 

More importantly, Figueroa is apparently arguing that the Mills administration had to spend $400 million more in this budget, and that it would have been somehow impossible to spend just $300 million more instead.

Let’s be clear about what’s happening here. The governmental response to COVID-19 forced many businesses all over the country to shut down or dramatically limit their operations, which resulted in hundreds of thousands of businesses closing their doors forever. The PPP loans were intended to provide a lifeline to businesses on the brink, and help them survive, keep employees and make it through this difficult time. 

In Maine, that resulted in 28,270 loans given out to businesses, totaling more than $2.3 billion. The top industries receiving funds were shellfish fishing (1,460 total loans), full-service restaurants (1,065), real estate (761) and beauty salons (552). The average loan was about $80,000 and it served an average company size of nine people. 

Many of those businesses — the ones that managed to survive — are barely hanging on by their fingernails. The loans were, for most companies, enough to stave off catastrophe, but certainly not enough to restore what was lost or to ensure prosperity. These were emergency rescue funds only.

To even think about using these people as a source of revenue is unconscionable, and will without question lead to more pain, hardship, and closures all over the state. All because the governor is seeking to spend more, and refuses to exert any fiscal discipline on herself. The Legislature can not allow this to stand.

Matthew Gagnon of Yarmouth is the chief executive officer of the Maine Policy Institute, a free market policy think tank based in Portland. A Hampden native, he previously served as a senior strategist for the Republican Governors Association in Washington, D.C.