Your miserly Uncle Bezos just died and left you a million bucks. Now, you have to decide how to spend it.
You could be sensible and pay off debt. Get rid of those school loans, credit-card balances, and mortgage payments. If there was cash left over, you could fix the roof or upgrade the kitchen. You could just walk around secure in the knowledge you had money in your pocket. But you’d also have to live with the knowledge that you’re a boring person, the kind that’s likely to spend the extra dough on self-improvement courses.
On the other hand, you could be reckless. Exotic vacations. Exotic drugs. Exotic sex. Buy a round for the house with the last of your inheritance. Assuming you could remember anything after the dope wore off, you’d have some wild memories to distract you from the misery of bankruptcy proceedings. You could take comfort in knowing that although you might be reduced to penury, you’d always have a reputation as a certified badass.
Of course, there’s some middle ground. You could save some of the money, spend some sensibly, and squander the rest. You could make charitable donations and do good works. You could buy an electric car. You could put the kids through college. You could book a flight into outer space. You could order weird cocktails in an Old Port bar. You could open your own Old Port bar.
What’s obvious is having a lot of money is going to disrupt your life. The only question is what shape you’ll be in when you come out on the other side.
That’s the quandary facing the state of Maine as it contemplates how to deal with the windfall it received from, not Uncle Bezos, but Uncle Sam. By mid-2023, it will have collected $822 million more than projected in the current two-year budget cycle.
To no one’s surprise, both parties have radically different ideas of what to do with that money. Democrats want to spend it on new programs. Republicans want to spend it on tax breaks. Both of them are being stupid.
This surplus is made up of one-time money that has flowed to the state through federal pandemic relief programs. Unlike revenue from sales or income taxes, once it’s gone, there won’t be another bequest from a dead uncle’s will.
Given that limitation, it makes sense not to squander the money on anything that carries a continuing cost. That would rule out the Democrats’ plans for paid family leave, affordable housing construction, and an extensive agenda of social welfare programs.
It also calls into question the value of the GOP’s top priority, which is to send $300 million of the excess cash back to taxpayers by exempting just over $10,000 in additional income from state taxes. That would amount to a one-time check of about $750 for the average taxpayer, a sum that probably wouldn’t cover a month’s rent or a single mortgage payment.
The Dems’ plan is fiscally irresponsible. The Republicans’ proposal is fiscally irrelevant. Both would spend this unexpected bonus without producing any long-term benefit.
There is, however, a way to use this largesse that would prove beneficial both in the immediate and far future. It wouldn’t earn state legislators reputations as either boring or badass (although many of them certainly deserve the labels), but it would demonstrate an all-too-rare measure of common sense.
First, put half the money in the state’s Rainy Day Fund, thereby boosting this account set aside for emergencies to about $900 million. That should be enough to carry us through any future crisis without having to resort to raising taxes or cutting vital services.
Second, the rest of the money should go into an infrastructure project with a lasting impact. That doesn’t mean paving roads or installing charging stations for electric cars that hardly anybody without an Uncle Bezos owns. It means building out broadband so the entire state has access to high-speed connections. That will spur economic development in rural Maine where it’s most needed and create new tax revenue for decades to come.
Finally, if there’s any of Uncle’s money left, buy a round for the house.
Make mine a shot and a beer. Place your orders by emailing [email protected].