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BY HENRY E.M. BECK
Our state government’s first priority must continue to be meeting the immediate health care needs created by COVID-19. At the same time, we have an obligation to plan for and mitigate against the impact of this unprecedented crisis on all aspects of our economy and government finances. Gov. Mills has consistently protected and added to our rainy day and this discipline will be beneficial. The governor’s recently enacted emergency balanced budget focused directly on immediate COVID-19. Thanks to advanced planning and responsible practices employed by our office, investments of state funds have not been materially impacted by recent market volatility.
My policy as state treasurer limits investments of taxpayer dollars to safer instruments such as collateralized bank accounts, CDs, and US Treasuries and federal agencies. At my direction, we ended further investments in riskier markets some months ago. While we do expect that earnings on our investments will lower, we believe we have avoided significant losses of taxpayer funds.
Not all losses can be prevented, however. The state has seen and will continue to see increases in unemployment. Of all the effects of COVID-19, unemployment is the most painful human cost. We must prioritize aid to laid-off workers and move quickly to provide these workers, as well as small businesses the financial support they need to get through this crisis. The Legislature, led by Senate President Troy Jackson and Speaker of the House Sara Gideon, has already taken significant steps in this regard by expanding unemployment coverage and using the Finance Authority of Maine and my office to offer loans to small businesses and consumers. We should also adopt private responses to COVID-19 for the long term. Permanently requiring adequate leave and health coverage for workers, expanding telehealth and accepting telework are all ideas whose time arrived before COVID-19 was part of our vocabulary.
There will be other serious economic consequences of this pandemic. State government should expect a decline in general fund tax receipts, which will result in a decrease in monthly revenue sharing with Maine’s towns and cities. My office administers the municipal revenue sharing program, and I know from this work, and from my time on the Waterville City Council, how critical this aid is to supporting the functioning of local governments from police departments to local roads. Municipalities should begin planning for a decrease in revenue sharing receipts immediately. A decline in economic activity will also impact pension funding levels, the health of endowments of nonprofits, and donations to charities. Decreased charitable giving may further strain local budgets as they may need to fill-in where non-profit social service agencies cut back services. State government must be prepared to calmly and carefully respond to these challenges. Going forward, policy makers must laser focus on providing direct benefits to workers and on private sector growth.
Clearly, Maine cannot respond economically alone. The power and purse of the Federal government are necessary. This past week, I joined several other State Treasurers urging Congress and Federal Reserve Chairman Jerome Powell to use direct federal funds to stabilize the government bond market to ensure vital projects continue. These projects don’t just build our roads, and schools, and hospitals, but they create good-paying jobs while doing so. Congress should focus on relief to people, business and state and local governments. Congress should immediately also pause student loan obligations and consider dramatic relief for borrowers.
Perhaps most importantly, the economic response to COVID-19 will take a new sense of social solidarity and compassion. If we are to assist affected large corporations, society should suspend cold judgment of our neighbors who fall behind on their bills or do not have a savings account. We should recognize that concern for the health of our grandparents knows no skin color, income level or foreign border. For Mainers who entered the workforce at the onset of the Great Recession, concerns about income equality and systemic imbalance are not new. Now, Mainers of all ages can rise to this public health and economic challenge with candor and determination.