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Question one passed with %93 percent returns in...

REFERENDUM/BOND ISSUES [top]
DIRIGO BEVERAGE TAX REPEAL
Yes 423840 64.17%
No 236691 35.83%

AUGUSTA (Nov 5): A new tax adopted in April by the Legislature was repealed by a vote of the people Tuesday, Nov. 4, leaving the Dirigo Health insurance program to rely on its former funding method.

That funding, said the director of the program, won’t come easily, with annual court battles expected to cost some $1 million, just as they have in the past.

With 75 percent of precincts reporting, Mainers supported ballot Question 1 by a margin of 64 percent to 36 percent, repealing a tax package that targeted the beverage industry as a means to fund DirigoChoice, the state’s subsidized health insurance program.

Supporters of the repeal effort hailed the results of the vote as proof that Mainers are tired of rising taxes.

“We said when this effort began in April that if Maine people are given a chance to vote on these new taxes, they would reject them,” said Newell Augur, who has been the public face of the Fed Up With Taxes Coalition, which supported the repeal. “The real battle was making sure that people understood the question.”

Gordon Smith of the Maine Medical Association, who has led the fight against Question 1, reacted to the results with dismay late Tuesday, citing the “unlimited checkbook” wielded by the opponents for the repeal’s success.

The Fed Up With Taxes political action committee, collected some $3.7 million in donations — the majority of it from beverage companies — and reported spending more than $2.7 million in support of the measure, which eliminated new taxes on a variety of beverages.

Having lost one challenge, the program faces another: The Maine State Chamber of Commerce has sued Dirigo Health in Kennebec County Superior Court over the constitutionality of its funding source, which is collected from insurance companies and self-insured businesses based on a formula that is recalculated every year.

“If that lawsuit is successful, it’d be a death knell to the program,” said Smith. “I don’t think the Legislature wants to do that and no one wants to see 18,000 people lose their health insurance.”

Karynlee Harrington, executive director of the Dirigo Health Agency, said Tuesday afternoon that reverting to the old funding system revives a host of problems that have hampered the program.

In addition to the annual litigation, it creates a cash flow problem because it takes up to two years to collect payments. Despite the problems, Harrington and Smith said the program will push forward. “We’ll do what we need to do to move forward,” said Harrington. “But we’re going to need the support of the Legislature.”

Even as the votes piled up against him, Smith agreed. “This is not a night to be pessimistic,” he said. “It’s not the night to be whining. It’s time to think about working with the governor and legislative leadership toward a solution.”

Question 2, which would have allowed the construction of a resort casino in the town of Oxford, appeared headed for defeat early Wednesday morning, though spokespeople for both sides of the question were unwilling to predict the result at that time.

With 75 percent of precincts reporting, the casino question was lagging behind, 54 percent to 46 percent.

“It was a sprint,” said Dennis Bailey, a hired consultant who lobbied against the casino. “In June, this thing was dead in the water. They threw everything at us and it appears they’ll fail. We’re hoping this will be the definitive vote [on the question of casinos in Maine].”

Patricia LaMarche, hired by the Las Vegas-based company Olympia Gaming, said the question’s defeat would be “awful sad.”

“This was about jobs. It was about the economy,” she said. “Here was a company with a $184 million investment knocking at the door. The people here [in Oxford County] are very concerned. It’s a bleak outlook; they don’t know what is coming for Maine.”

Question 3, which sought to borrow $3.4 million to leverage $17 million in other funding sources for revolving loan programs that benefit clean drinking water and wastewater treatment facilities, appeared on course for passage. With 75 percent of precincts reporting, it was in the lead 51 percent to 49 percent.

AUGUSTA, Maine - Gov. John Baldacci is urging Mainers to vote against repealing the new taxes on beer, wine and soda, saying the revenues are needed if Maine is to ever provide universal health coverage.

Those new taxes as well as taxes on paid insurance claims were enacted last spring as a way to fund the state-subsidized Dirigo health insurance program. Maine voters will decide whether to repeal the taxes under a people's veto question on Tuesday's ballot.

In his weekend radio address, Baldacci acknowledges that people are fed up with taxes. But he says there are hardworking Mainers who are also fed up with not having quality health care coverage.

The Democratic governor also says the law containing the beverage tax will also decrease the existing tax on health claims.

Republicans have been highly critical of the expanded taxes and contend they would prop up a failed state program.

No one would argue the need for affordable, high-quality health care for Maine. Unfortunately, voting no on Question 1 does nothing to further that goal, which is why I am voting yes to reject the proposed new taxes on health care claims and beverages.

This newspaper's recent endorsement of a no vote seems to be based on the questionable logic that voting against the people's veto will “give Dirigo a chance to succeed.” Dirigo's own advocates, of which I consider myself one, admit that despite innovative thought and excellent intentions it is not succeeding.

Dirigo already has been given five years and more than $100 million of taxpayers' money. Regrettably, the program has not achieved anything even close to the success its backers promised. Asking Maine people and small businesses to shell out $75 million in new taxes each year, when the existing program covers about 1 percent of the state is not the answer; it is simply poor fiscal management.

I say this as a practicing physician and president of the Maine Osteopathic Association. Throughout our 100-year history, our doctors have made it a priority to provide quality health care to all Maine people, especially the uninsured and underinsured. This is evidenced by the large proportion of our membership who provide free or reduced-rate care to the neediest members of our communities.

The board of directors of our association voted unanimously to support a yes vote on Question 1. As an organization, we simply are unable to support this expansion of Dirigo funding. We do not believe that new taxes that disproportionately affect small-business owners are an appropriate source of revenue in these challenging economic times.

The cost of health insurance in Maine is one of the highest in the country. When we are looking to decrease the number of uninsured people in Maine, the easy response is just to add a new tax, but that is not the right fix. We need to find solutions to bring costs down, not drive them up.

Fundamental change in state insurance regulations, not taxes, can make Maine insurance affordable. The same insurance policies offered in Maine are offered in other states for half to one-third the price; achieving these savings should be our focus, not more funding for a failing program. Given our current economy, adding a new tax when it does not solve the problem it claims to address is simply outrageous.

Perhaps because many of our physicians serve in rural areas of Maine, we have a better understanding of the relationship between the health of our people and the health our economy. The best thing that we can do to reduce the number of uninsured in our state is to create good jobs with good benefits and to change state regulations to make health insurance affordable. Raising taxes is not the way to make that happen.

The BDN editorial also dismissed a recent study by a University of Maine economics professor showing the new beverage taxes will cost Maine $26 million in lost sales and that nearly 400 of our fellow residents will lose their jobs.

How are we helping improve health care for Maine people by weakening our economy, eliminating jobs and potentially making health care insurance even more expensive by taxing the claims of those who already

are working hard to keep their coverage?

The editorial tries many different ways to justify these new taxes, but in our opinion they can't be justified — not at this time and not for this program. No matter how you look at it, these taxes simply prop up a novel program that has been given ample opportunity and ample resources to succeed and has failed to make the grade.

Thanks to the people's veto, Maine people finally get to have their say. I urge readers to join our association in voting yes on Question 1 to reject these taxes.

Douglas Jorgensen of Manchester is a practicing physician and president of the Maine Osteopathic Association.

If the referendum passes on Nov. 4, it would overturn a recently-enacted law that levies a tax on soda, beer and wine to help pay for and expand Maine’s DirigoChoice health insurance programs.

Opponents of the referendum say Mainers will pay just a penny more for a glass of wine and four cents for a can of soda. Supporters say the ultimate costs will be much higher, and Mainers shouldn’t have their beverages taxed to pay for the health programs.

“Through this veto, we’re giving Maine people the opportunity to have their say on these new taxes,” said Leslie Thistle, owner of Bangor Cheese & Wine and Cafe Nouveau and a Question 1 proponent.

But many who support Question 1 aren’t as local as the Bangor businesswoman. National beverage companies including the Pepsi and Coca-Cola bottling companies and Anheuser-Busch donated $1.5 million between July and September of this year to help overturn the new tax.

All the national attention is because Maine’s law has significance beyond its borders, according to the director of the Washington, D.C., think tank the Center for Science in the Public Interest.

“There are about a dozen states that have soda taxes,” said Michael Jacobson, director of the center. “But I don’t know of any other state that’s using revenues to promote health.”

Jacobson said he thinks the soda companies have targeted Maine because of the law’s significance.

“Maybe for them, Maine is good practice,” he said. “The next time a state or Congress tries levying a tax on soda, they’ll be ready with their arguments.”

The law that Question 1 seeks to overturn involves more than taxing soda and other beverages of choice, although that is where much of the attention has gone.

Before the new law was passed in April, the state’s roughly $50 million DirigoChoice programs were funded by the unpredictable and unpopular Savings Offset Program. The program has taxed health insurers since 2003 on the state’s estimated cost savings thanks to the Dirigo programs.

It has been replaced by a 1.8 percent surcharge on health insurance claims, which should generate $33 million in 2009, and the new excise tax on beer, wine, soda and other sugary beverages that the state estimates will raise about $17 million.

Officials from the Maine Medical Association who are fighting Question 1 recently said that if they could frame the referendum as a health care matter, they would win, but if it is framed as a tax matter, they will lose.

“From a physician’s standpoint, it’s a win-win tax,” said Gordon Smith, vice president of the Maine Medical Association. “These products, along with tobacco, should be taxed. They contribute to obesity, diabetes and high health care costs.”

But that’s not what those working to overturn the tax think.

Fed Up With Taxes, the political action committee that gathered enough signatures to get Question 1 on the ballot, has funded an economic study that shows the tax would have a sharply different impact than previously expected.

University of Maine economist Todd Gabe estimated that every Mainer drinks 52 gallons of soda, sports drinks and other taxable beverages each year — a higher figure than the one used by the state. Using those figures, Mainers would pay about $40 million in additional taxes.

According to Gabe’s figures, the higher figure would lead to a statewide reduction in sales revenue of $26 million per year and the loss of 395 part-time jobs.

“I think that far more people will be harmed than will be helped under the proposal,” said Kristine Ossenfort at the Maine State Chamber of Commerce.

Thistle said her Bangor businesses are already threatened by the imploding economy.

“People will buy less,” Thistle said. “I’m in the business of want, not need. It has an impact.”

Thistle also was one of the first proponents of Question 1 and said that tax hikes, however slight, have real impacts on real Mainers.

“Enough is enough,” Thistle said. “We don’t need anymore taxes right now. What we need is help.”

Opponents of Question 1 agree with Thistle that the tax would have a real impact on Mainers.

Dr. Stephanie Lash of Bangor, the president of the Maine Medical Association, said funding health care is important even in tough economic times.

“One of the best investments we can make to keep the state strong and vibrant is, literally, to keep the state healthy,” she said.

Back in the spring, majority Democrats in the Maine Legislature, with little or no public discussion, pushed through legislation doubling the tax on beer and wine, creating a new tax on soft drinks and imposing a 1.8-percent surcharge on all claims paid by health insurrance companies and self-insured businesses. The estimated $75 million in revenue generated by those changes was earmarked to keep alive Dirigo Health, a subsidized insurance program that never has fulfilled expectations and should have been allowed to die a natural death.

It’s unfortunate that the beverage tax repeal effort didn’t go further and set its sights on the Dirigo Health program itself.

It didn’t take long for opponents to mount a people’s veto petition drive aimed at repealing the new and increased taxes and the surcharge on paid insurance claims. In relatively short order, the Fed Up with Taxes Coalition collected and filed more than 90,000 signatures, thus forcing a statewide vote at the upcoming election on Nov. 4.

Question 1 on the referendum election ballot asks: “Do you want to reject the parts of a new law that change the method of funding Maine’s Dirigo Health Program through charging health insurance companies a fixed fee on paid claims and adding taxes to malt liquor, wine and soft drinks?”

The answer from Maine voters, we believe, should be a resounding “yes.”

The economy, not just in Maine but across the United States, is struggling to avoid a full-fledged depression, or worse. Mainers have seen prices for necessities such as food and fuel increase dramatically in recent months. Those who have even modest retirement account investments have watched them shrink in value as the stock market has plunged downward. This is no time to be raising taxes on beverages, health care or anything else.

It’s unfortunate that the beverage tax repeal effort didn’t go further and set its sights on the Dirigo Health program itself. As a cornerstone of Governor John Baldacci’s administration, Dirigo has been an abysmal failure. The next Legislature, when it convenes in January, would be well advised to put Dirigo out of its misery.

On Nov. 4, Maine voters will be asked to repeal a package of tax levies passed earlier this year by the Legislature and signed into law by Gov. John Baldacci.

Without hesitation, voters should blacken the “yes” box on their ballots next to Question 1, The People's Veto, which reads:

Do you want to reject the parts of a new law that change the method of funding Maine 's Dirigo Health Program through charging health insurance companies a fixed fee on paid claims and adding taxes to malt liquor, wine, and soft drinks?”

As explained in neutral terms by Ballotpedia. org: “The bill will raise over $100 million for the Dirigo Health Choices program by taxing beverages and doctor's fees. … The tax package includes a new $4 tax on a gallon of syrup used to make soda in restaurants; a new 42-cent-per-gallon tax on bottled soft drinks, and, a doubling of the current tax on beer and wine, to 54 cents a gallon on beer and 65 cents a gallon on wine. The package also includes a 1.8 percent tax on claims paid by insurance companies and the self-insured to replace a similar fee that supports Dirigo Choice insurance today.” Seems like a good cause, but is it? And is it worth adding to the tax burden of Mainers already struggling in the current failing economy?

In simple terms, Mainers are already overtaxed. Nationally, Maine ranks 15th in state tax burden and has little to show for it. To put that in perspective, the Pine Tree State leads 23rd ranked Massachusetts at 9.5 percent — a state with a strong infrastructure, mass transportation and strong high-tech industry. And while 15th may not seem all that bad, Maine's neighbor to the west, New Hampshire, ranks 46th nationally at 7.6 percent.

Then there is the failure called “Dirigo.” As reported in the Kennebec Journal on Sept. 22: “It (Dirigo) was promoted as a program that would cover 136,000 uninsured Mainers by 2009. To date, it covers about 18,000 people, 6,000 of whom are part of the state's Medicaid program. Recently, the program borrowed $20 million from the state General Fund — which must be repaid with interest — because of a cash flow issue.” If only covering 18,000 of a projected 136,000 Mainers has forced the state to borrow to this degree — and requires a $100 million infusion of tax — imagine what the bill will be if Dirigo ever comes close to its goal. The reality is that Dirigo — if allowed — will continue to siphon off much needed tax dollars, a point conceded by opponents of Question 1.

The coalition No On One blatantly argues it is fair to impose a tax of a “few pennies” on Maine goods to fund Dirigo. Never mind that those pennies will add up to an additional $100 million subsidy — far more than just a “few pennies” by anyone's measure. No On One also argues there are no alternatives, that vetoing Baldacci's tax package will lead to more costly emergency room visits and higher costs for everyone.

Odd that No On One ignores the added tax burden this tax package places on “everyone,” including those Dirigo seeks to help.

Opponents of Question 1 urge voters not to veto the tax package simply because they are angry with the way the Legislature passed Baldacci's Dirigo Health bill — in a rush to adjourn the legislative session and without a public hearing.

“If you're angry with Augusta about taxes, this is not a way to vent your anger,” Edie Smith, campaign manager, is quoted as saying.

Ms. Smith, anger is not the issue. An abdication of responsibility by the Democratic-led legislature and a complicit governor are the issues Dirigo is broken. If it cannot be fixed, scrap it. Don't continue to throw good taxpayer money after bad. If it can be fixed and made to pay its own way, then do so.

Yes on Question 1 is a prudent vote and a disciplined one that should be used to send a message to Augusta.

This era finds our citizenry sometimes feeling like a butterfly in a hurricane in the midst of this crashing economy, seesaw gas prices, a punchdrunk housing market, and so on. Then comes a group of Mainers launching what amounts to a 21st century version of the Boston Tea Party.

These folks have coalesced into an organization called the Fed Up With Taxes coalition, and in the spirit of their patriotic forefathers they are challenging taxes they believe are being unfairly implemented. In essence, they don’t believe they were given a voice by the government, so they’re making sure their voice is heard anyway — whether the government wants to hear it or not.

On the Maine ballot this November, voters will have an opportunity to vote down taxes passed by the state Legislature to raise funds for its health program. You’ve probably heard or seen the commercials being aired regarding Question 1 on the referendum, urging people to either vote “yes” to reject the taxes or “no” to endorse them.

Advocates behind this “people’s veto” say citizens weren’t permitted any input when Gov. John Baldacci signed into law back in April a bill establishing an excise tax on soft drinks, juice drinks and flavored water, as well as raising taxes on beer and wine. It also calls for new taxes on health insurance claims. These opponents say lawmakers tried to “sneak” the tax hike into the books.

I’ve come late to this debate, and can certainly sympathize with the intent behind the law, which as I understand it is to fund health care for those who can’t otherwise afford it. But is this really the best time to ask people to dig deeper into pockets already a bit on the light side?

A bunch of citizens and businesses decided it was not. They could’ve sat around and bitched about it, but instead they took action. You gotta love it. Even while living in the neighboring state of New Hampshire, I always admired the ornery “take no crap” independence of Mainers, and we’re seeing it exemplified here again.

This group rounded up 95,000 signatures to challenge the law through a referendum ballot and then launched a blitzkrieg marketing campaign to get its message out. The Fed Up With Taxes coalition includes Maine’s Chamber of Commerce, as well as the state’s restaurant, grocers, innkeepers and beverage associations, and other groups.

As a guy living in Kittery, I can assure you that a lot of people cross over the bridge into New Hampshire as it is for groceries, gasoline and most everything else. I’m one of them. And now you’re going to add MORE taxes to some of these items? A University of Maine economist (commissioned by the anti-tax group) says the new taxes could result in lost sales revenue of $26.3 million across the state.

So if this law isn’t stopped, we could wind up bringing home less money and paying more out to the state.

As for the Dirigo Health program, there seems to be some question as to whether it’s being run to its utmost efficiency. Recently the state admitted its savings forecast for the health plan would be closer to $49 million than the nearly $150 million originally suggested. Again, as I understand it, the original plan was to fund the health program through these savings.

As a consumer, I would want to make sure I’m getting my money’s worth; as a taxpayer, I don’t mind helping people out, but I’m not crazy about giving handouts to people who might be taking advantage of the system.

If nothing else, I’d like to see the ballot question passed just to remind lawmakers they can’t make laws without input from the people they represent.

WINNER OF THE WEEK: I adore my wife and she knows it — but she also knows, and tolerates, my longstanding crush on writer/actress Tina Fey. It’s been gratifying to see the rest of the world slowly come to appreciate this funny lady as well.

Who in America is hotter than Tina Fey right now? Earlier this year, she won a Golden Globe for best TV comedy actress even though she’s always considered herself more of a writer; in the spring she helped make the movie “Baby Mama,” a chick-flick that was actually kind of funny; a couple of weeks ago she won an Emmy for best comedy actress, another Emmy for best comedy writer, and a third Emmy for producing the best comedy TV show, “30 Rock,” which she created almost single-handedly; her “Saturday Night Live” bit about Hillary Clinton during primary season (‘Bitches get stuff done!’) and her ongoing devil-sweet portrayals of Sarah Palin have been the absolute rage of this outrageous political year.

And now I see she’s signing a book deal in the neighborhood of $5 million to $6 million. That’s what I call a good year for the woman who brought the smart to sexy.

D. Allan Kerr is beginning to feel cautiously optimistic about another Red Sox World Series. He may be reached at the­_culling@hotmail.com.

"These total impacts are spread across the entire Maine economy, but concentrated in restaurants and bars, retail stores and other companies that sell and distribute beverages," he says.

"Many people might be tempted to combine the $40.7 million in additional taxes and the $26.3 million in reduced sales revenue into a single impact figure. But that would be comparing apples and oranges," Gabe said. "They are different types of impacts, but the bottom line is an increase in the price of beverages and a loss of sales revenue to the beverage industry."

Gabe�s study on the fiscal and economic impacts of the beverage tax was commissioned by "Fed Up With Taxes," a coalition of businesses and individuals, and several associations representing stakeholders.

The report does not take a position on Question 1, Gabe says. "It simply estimates the effects of the new law on beverage taxes, as well as the economic impacts of the statewide reduction in beverage sales revenues associated with the tax hike," he says. "Other aspects of the law need to be considered to make a judgment about whether Public Law 629 is good or bad for Maine."

The intent of the study is to inform the debate on Question 1 the repeal question on the upcoming ballot, Gabe says.

"This kind of information is important for voters to consider," he says. "It's a lengthy report, but the majority of it is about how the numbers were generated."

Gabe can be reached for comment at (207) 581-3307.

But that this proposed tax represents a small portion of the overall tax burden in Maine does not make the law in question good policy. In fact, the legislation is badly flawed. It is for that reason that we endorse a “yes” vote on Question 1, which would trigger a veto of the new beverage tax.

The beverage tax came about in negotiations as the Legislature wound down earlier this year. Lawmakers were trying to address dissatisfaction with the funding mechanism for the state’s Dirigo Health insurance plan. The original idea behind Dirigo was to first find savings in the state’s health-care system. Some of those savings would then be captured in an assessment on insurance claims, and that money would be used to pay for a new insurance program for individuals and small businesses.

Dirigo hasn’t produced as much savings as hoped for, and it has been hard to document what savings there have been. Employers and others are therefore skeptical of the assessment on insurance claims, seeing it not as a recovery of savings, but as a tax.

To address these concerns, lawmakers looked for a new way to fund Dirigo. After considering a cigarette tax, they settled on the beverage tax and a more modest assessment on claims at a fixed rate.

This approach betrays one of the basic principles of Dirigo. The whole idea behind the program was to find savings within the system and use that money to help the uninsured. Pumping new money into the program simply adds to an already inflated health-care bill for the state.

It would be better if the state got rid of the beverage tax and returned to the old way of funding Dirigo. Lawmakers could then try to figure out how to generate more system savings or make the funding mechanism more transparent.

Given the narrow nature of this tax and its small size relative to the state budget, this is, as critics of the repeal effort have said, a small issue to be taking up in a referendum.

But, nevertheless, it is on the ballot, and given the flaws of the beverage-tax legislation, a “yes” vote is warranted.

Dirigo Health is the state's program for uninsured people, small businesses and certain low income residents.

Question 1, known as the People's Veto, asks voters if they want to reject parts of the new law that uses new taxes on beer, wine, and soft drinks — as well as charges health insurance companies a fixed fee on paid claims — to fund the program. It's the beverage tax that has raised the most opposition.

"This is a massive tax," said Newell Augur, a member of the group Fed Up with Taxes. "It will hit every non-alcoholic beverage that you can have in your refrigerator. It will cost $75 million in total, $40 million on beverages and $35 million on insurance claims. It's a massive tax."

Fed Up with Taxes is a coalition that includes the Maine State Chamber of Commerce, Maine Restaurant Association, Maine Grocers Association, Maine Oil Dealers Association, and Maine Beer and Wine Wholesalers Association, among others.

The opposition to the question is led by the No on One Coalition. It argues that the change in funding is necessary because the current method, based on an annual assessment on health insurers in addition to employer and employee premiums, doesn't work.

"The savings offset payment worked well in theory particularly if we'd have been able to cover most of the uninsured," said Gordon Smith of the Maine Medical Society, one of the coalition's members. "When we couldn't, the payment system became extremely controversial. Now it costs the state almost $1 million in costs to defend against the yearly challenges (to the assessment)."

Smith added that the program is unpredictable. "It's difficult to cover these folks and not know year to year what (funds) you'll have to work with," he said.

Smith challenged Augur's claims about the expected revenue from the new tax. He said the new taxes on beer, wine and soda would bring in about $17 million.

"The difference is based on the volume of consumption," Smith said. "The other side has estimated a huge amount (of consumption). The tax is only a penny on a glass of wine, three cents on beer, and four cents on a can of soda."

The No on One Coalition includes the Maine Primary Care Association, Consumers for Affordable Health Care, Maine Center for Economic Policy, and Maine Society of Eye Physicians and Surgeons, again among others. It argues that Dirigo works and could be damaged if the veto passes.

The group estimates that 18,000 children and their families and 40,000 adults who don't have employer-based insurance could lose their coverage if the veto passes.

Augur said that won't happen. He argued the current method of funding would simply continue if the question passes and that's fairer for the taxpayers.

"Maine families are struggling right now," he said. "It's absolutely the worst time for state government to be asking people to pay more money. Incomes here are low so (the new tax) makes the tax burden that much heavier. The idea of taking more money out of pocketbooks has Maine people fed up."

Smith agreed that the current funding method, which was calculated at $48.7 million in 2007, would continue but that it wasn't sufficient. "It's not enough money to continue," he said. "It would barely allow the program to continue.

Recent News Maine voters to have say on beverage tax in November Dirigo Health Plan saves less Letter from Mark Turek: Why yes on question one means no on taxes Question 1 proponents explain why a yes vote means no to new taxes Dirigo’s Defenders Waging Propaganda War By Rep. Jonathan McKane VIEW MORE Get the Flash Player to see this player.

The Facts

Q. What is a People’s Veto?

A. The People’s Veto Veto process is our right to challenge an act of the Maine Legislature by putting on the ballot. The Fed Up With Taxes Coalition collected more than 95,000 signatures from Maine citizens who oppose new taxes on beverages and health care. This allows the issue to be put on the November 4, giving all of us a chance to “Vote Yes On Question 1” to undo this tax increase that the legislature tried to sneak by us.

Dirigo was supposed to be the closest thing to universal health care that Maine, and the nation, had ever seen. Today, Dirigo is nationally recognized as a colossal failure. Hopefully, the old saying "As Maine goes, so goes the nation" won't apply this time.

Dirigo was passed in 2003, with bipartisan support, based on promises by Gov. Baldacci and his Augusta bureaucrats. Politicians and the public were assured the taxpayer-funded government healthcare program would cover all 128,000 uninsured Mainers by 2009. Baldacci and his cronies also promised that Dirigo would pay for itself through the healthcare savings it would create and would NEVER require tax increases for funding. Today, just five years later, both promises have been broken.

As we approach the 2009 benchmark, just 11,500 Mainers are covered by Dirigo, fewer than the 128,000 goal, and down from a high of 15,000 enrolled last September. Of those 11,500, only about 3,900 were previously uninsured, and, for over a year now, Dirigo has been closed to new enrollees. Not exactly the progress we were promised, huh?

At a cost to taxpayers of $3,040 per enrollee annually for coverage and overhead, Dirigo is a massive burden that cannot meet its goal of universal coverage. The new $70 million tax increase that broke the no-new-taxes promise was passed not to expand coverage, but to fund benefits for those last few thousand still enrolled. Even if the people's veto campaign fails, Dirigo enrollment is still expected to decline by another 1,000.

The Fed Up With Taxes coalition rightfully notes that Maine's tax burden is already too high, especially with a struggling economy and rising energy costs. The new Dirigo tax only increases that burden. In the age of the five second sound bite, however, their people's veto campaign won't have many opportunities to discuss the program's failures.

Whether or not voters reject the tax increase, it's time politicians recognize that Dirigo isn't working. The solution to covering Maine's uninsured is not another tax increase to fund a failing government program. Expanding the number of private health insurance options will empower Mainers to find affordable healthcare coverage, and will reduce the burden Dirigo has heaped onto taxpayers.

Enabling and empowering Mainers to purchase health insurance plans available in other states will quickly and significantly reduce the rate of uninsured. Today, there is essentially just one private insurance option available for Maine individuals and only three available for small businesses. With so few options available, is it surprising that Mainers can't find an affordable plan?

Residents in other states are paying much less than Mainers for an identical private health insurance plan. In Connecticut, for example, a 25-year-old can find an individual health insurance plan for just $162 a month with no deductible. That same individual would pay $700 each month with a $1,000 deductible for the very same plan in Maine with our high cost regulations. No wonder Maine's uninsured rate for young adults is so high.

Real progress in covering Maine's uninsured will come when politicians eliminate the gimmicks and red tape keeping private health insurance companies from offering their plans in Maine. Raising taxes to fund a failing government-run healthcare program is taking us backward in the goal of covering the uninsured.

Politicians' obsession with Dirigo has essentially shut down conversation about real healthcare reform. As part of the annual scramble to revive the failing program, too many politicians are unwilling to entertain proposals like the one mentioned above. Had Dirigo been passed along with new private insurance options, more Mainers would be insured today.

I support the efforts of the Fed Up With Taxes coalition (http://www.fedupwithtaxes.org), and even signed their petition to eliminate the $70 million tax increase, to send a clear message to politicians that taxes are too high, and because progress in covering Maine's uninsured requires politicians to accept that Dirigo has failed. Entertaining other health care reforms, like expanding private health insurance options in Maine, will create a responsible solution to our healthcare challenges, and that is what we need to focus on.

Chris Cinquemani is the communications director of Maine Leads, an Augusta-based non-profit working for lower taxes and government transparency in Maine. Chris previously served as field coordinator and communications director for the 2006 Taxpayer Bill of Rights Campaign, communications director for the Maine Senate Republican Office, and state director of the 2007 No More Than 4 Campaign to oppose extending term limits for state legislators.

“I know first-hand what the impact of these new taxes will be on Maine’s small businesses and working families,” said Emmons, “With the rising costs of gasoline, heating oil and groceries, this is absolutely the worst time to be increasing taxes on beverages we all enjoy such as flavored water, juice drinks, beer, wine and soda.”

Fed Up With Taxes/Yes on 1 is a bipartisan coalition of Maine people, businesses and organizations that submitted more than 95,000 names to the Maine Secretary of State earlier this summer in order to force a statewide vote on repeal of $75 million of new taxes on everyday beverages and health care claims.

The new taxes increase the price of beer, wine, flavored water, teas, sports drinks, juice drinks, soda, and many other popular beverages. The same legislation also created a new 1.8% tax on paid health insurance claims.

The ad is airing on television stations throughout the state and also can be viewed at www.fedupwithtaxes.org.

Contact: Ted OMeara at Pierce Atwood Consulting (207) 791-1400

The number certified — 17,345 more than the 55,087 needed to get the veto on the ballot — likely means the Secretary of State’s decision won’t be challenged in court.

“I would not anticipate a court challenge,” said Gordon Smith, head of the Maine Medical Association and spokesman for the group opposed to the tax veto. “We’re much better off, given the margin, putting our money into educating Maine voters about what this proposed law really did; why it’s important to keep it; and to begin the fall campaign.”

Newell Augur, spokesman for the successful Fed Up With Taxes veto drive and a lobbyist for the Maine Beverage Association, said his group is also focused on November.

“This clearly reflects how people feel right now, and we’re moving full speed ahead to begin our campaign to urge all Maine people, who are fed up with high taxes, to vote yes on Question 1,” Augur said.

The signature-gathering campaign was funded largely by the beer, wine and soda industry, with help from the Maine Restaurant Association, tourist-related industries, convenience store operators and other businesses. It spent nearly $500,000 to get the needed signatures in the 60 days required by law.

Opponents of the veto spent $86,000 to try to dissuade people from signing, money that largely came from a single out-of-state donor who lives part time in Maine and supports Democratic causes and candidates.

Fundraising for the fall campaign battle is expected to dwarf those amounts.

The taxes passed would raise between $55 and $75 million, depending on whose estimates one believes.

They include a new $4 tax on a gallon of syrup used to make soda in restaurants; a new 42-cent per gallon tax on bottled soft drinks; and a doubling of the current tax on beer and wine, to 54 cents a gallon on beer and 65 cents a gallon on wine.

The package also includes a 1.8 percent tax on claims paid by insurance companies and the self-insured to replace a similar fee that today supports DirigoChoice insurance.

The beer, wine and soda taxes were passed without warning to the beverage industry and without a public hearing in the final days of session to replace a proposed hike in the cigarette tax that didn’t have the votes to pass in the Senate.

While opponents say without the new taxes the DirigoChoice health plan will cease to exist, in reality there is a funding mechanism in place that can be continued for the foreseeable future.

It is an assessment on private health insurance and the self-insured that this year is raising just less than $33 million. Next year’s assessment will be determined in September and collected if the people’s veto prevails at the ballot box.

The problem is the assessment has not raised enough money to grow DirigoChoice, which Gov. John Baldacci pushed through in his first term and has protected as the state’s best chance at insuring the uninsured.

There are currently just more than 12,000 people enrolled in the health plan because of limited funding. The assessment also pays the state’s share of enrolling another 5,000 people in straight-up Medicaid — the federally subsidized insurance plan for the poor.

The Fed Up With Taxes campaign says it’s not against DirigoChoice, but rather the raising of taxes in bad economic times. ”These taxes were passed without a public hearing in the dead of night,” said Augur.

The anti-veto campaign, aligned under the group Health Coverage for Maine, argues the beer, wine and soda industry simply wants to avoid a tax at the expense of health care for Mainers.

“We are certain that when the voters are informed, people aren’t going to trade health-care coverage for Maine people for a few pennies on beer, wine and soda,” Smith said.

Opponents have until 5 p.m. Monday, Aug. 25, to challenge the Secretary of State’s certification of the petition signatures. That challenge would then be heard in Superior Court.

“These taxes place an significant new burden on Maine consumers and small business owners at a time when we already are struggling with the high cost of energy and just about everything else,” said Alisa Coffin, one of the six citizens who initiated the people’s veto last May and the owner the Great Impasta restaurant in Brunswick. “Maine people have had enough. If we don’t repeal these taxes now the politicians in Augusta will just continue to tax and spend. It’s time to send them a message.”

The new taxes, passed late at night in the closing days of the last legislative session without any public hearing, increase the price of beer, wine, flavored water, teas, sports drinks, juice drinks, soda, and many other popular beverages. The same legislation also created a new 1.8% tax on paid health insurance claims.

Fed Up With Taxes, a bipartisan coalition of Maine people, businesses and organizations, submitted more than 95,000 names to the Secretary of State on July 15. At that time, more than 80% of the names had already been validated by municipal clerks. The Secretary has now ruled that petitions containing 72,432 were properly completed.

Newell Augur, chairman of Fed Up With Taxes/YES on 1, said that his group expected a certain number of petitions to be disqualified for technical reasons, as is usually the case with any citizen’s initiative or people’s veto, but that he was pleased that they still ended up with many more than the 55,087 signatures needed to force a vote on the new taxes.

He also said that he would not be surprised to see backers of the new taxes to launch an effort to try get more petitions thrown out.

“The same special interest groups that didn’t want a public hearing on these taxes and then spent more than $100,000 to stop Maine people from signing our petitions will probably make one last desperate attempt to keep Maine people from having their say,” Augur said. “We know that these petitions reflect how most people feel right now, and we are moving full speed ahead with our campaign to urge all Maine people who are fed up with high taxes to vote yes on question 1.”

Don't believe them. Dirigo will continue whether these taxes are repealed or not. No one will lose health care.

As a member of the Legislature's Joint Committee on Insurance and Financial Services, I have been present for every legislative hearing, work session and discussion on Dirigo Health over the past four years. I also receive quarterly statements about Dirigo enrollment and finances. The facts about Dirigo tell a much different story than the one Dirigo proponents use in favor of the new taxes on TV and radio and in newspaper columns.

Dirigo is fully funded through the Savings Offset Payment (SOP) and will continue to be funded that way should the people's veto to repeal these taxes succeed. The SOP, through an incomprehensible and ever-changing formula, calculates the supposed "savings to Maine's health care system," then taxes insurance companies that amount.

The claims of huge savings to the health care system have never passed the straight-face test and have been the target for ongoing lawsuits by Maine's insurers and other entities. After the first year of operation, Dirigo claimed it had saved $133 million. By the time the SOP hearing was finished, Maine's superintendent of insurance had dropped that amount to $43 million.

Even that was a stretch. These "savings" included our hospitals' voluntary freezes and cutbacks, such as delaying capital improvements, forgoing major purchases and freezing personnel wages. All of these expenses will be made up eventually and could hardly be considered savings.

Still, Dirigo claimed these were indeed savings and they got their money — at the expense of all of us who buy health insurance in this state. The insurance carriers simply add the cost to premiums. This is the current funding system for Dirigo.

This year Dirigo is claiming $149 million in savings to the system, the highest amount ever, even though enrollment has dropped by thousands since its high point. The final decision on how much of this money Dirigo will receive will be made by the new superintendent of insurance, Mila Koffman. She has testified in favor of Dirigo in the past before our committee, so it could be a good year for Dirigo.

So why does Dirigo need the new taxes on beer, wine, soda and health care services? Because the SOP is a difficult, complex and contentious process. It is much easier to simply take the money and forget about proving anything.

Some 90,000 Maine voters signed the petition to put the people's veto on the ballot — a huge level of support. The pro-tax Dirigo proponents are fighting back with a propaganda onslaught about the number of people who could be "at risk of losing health care" if the Dirigo taxes are repealed. We first heard 20,000 from the Dirigo tax bill's sponsor, House Majority Leader Hannah Pingree, even though the program's actual enrollment is only around 12,300. For greater shock value, they then started to use 50,000. The most recent figure I've heard is 58,000.

These latest numbers include everyone in Maine who buys health insurance in the individual market. Supposedly we would all be "at risk" because the Dirigo program saves the system so much money. In truth, Dirigo costs the system money. It is a tax on health care and we are all paying for it. The claims about the successes of Dirigo Health, the amount of money saved and the number of people who benefit from Dirigo are preposterous. These are bold falsehoods that are breathtaking in their audacity. The bottom line is that the money necessary to run Dirigo and pay the six-figure salaries of Dirigo bureaucrats will continue rolling into the Dirigo offices in Augusta whether these new taxes take effect or not.

Rep. Jonathan McKane, R-Newcastle, represents Bristol, South Bristol, Damariscotta, Edgecomb, Newcastle and Monhegan. He may be reached through www.jonmckane.com.