Maine Voters Repeal Dirigo Tax Increase

Published January 1, 2009

Voters in Maine will have a slightly smaller tax burden this year after passing a ballot initiative in November repealing a tax increase implemented earlier in the year to fund an expansion of Dirigo Care, the state’s taxpayer-funded health insurance program for individuals and small businesses.

The tax increase, which consisted of a 4 cent surcharge on sodas, a 7 cents-per-bottle charge on wine, and a 16 cents-per-sixpack charge on beer, was passed in April despite a promise from Gov. John Baldacci (D) that Dirigo, implemented four years ago, “would never require an increase in taxes,” said Tarren Bragdon, CEO of the Maine Heritage Policy Center.

‘People’s Veto’

The ballot measure, known as a “People’s Veto,” garnered more than 60 percent of the popular vote, according to unofficial numbers from the Maine Secretary of State’s office.

It officially repealed LD 2247, “An Act to Continue Maine’s Leadership in Covering the Uninsured,” which would have expanded the Dirigo Care program by $28 million annually, using the newly imposed tax increases to cover the additional costs.

Although government officials claimed Dirigo expansion would greatly reduce the number of uninsured Mainers, the tax increases put in place to fund the expansion were so unpopular with residents a coalition dedicated to repealing the tax increases was able to collect 90,000 signatures—nearly twice as many as required—to put the People’s Veto on the ballot.

Since its inception in 2004, Dirigo Care has expanded the ranks of the insured by a little more than 5,000 individuals, or 4 percent of the 128,000 Mainers who were previously without health insurance. It has cost the state’s taxpayers nearly $164 million—$32,800 per newly insured individual, according to figures from the Maine Heritage Policy Center.

‘Waste of Money, Effort’

Experts applauded Maine voters’ decision to repeal the tax increase.

“In Maine, Dirigo Health has been a colossal waste of money and effort,” said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. “It has never reached even one-tenth of what it promised to do, but like politically driven programs everywhere, once enacted, the politicians will keep stuffing taxpayer money into it until the taxpayers rise up and say ‘Enough!’—which is what this initiative did.

“The state should now devote its energy to doing things that might actually do some good, like helping Mainers buy the private coverage of their choice and lowering costs by reducing needless regulations,” Scandlen added.

“Clearly the voters understood that the Dirigo Health program was a well-intentioned but costly failure,” Bragdon said. “Struggling with one of the highest tax burdens in the country, Maine families were clearly fed up with taxes and sent a strong message to elected officials.

“Read their votes,” Bragdon concluded. “No new taxes.”

Joe Emanuel ([email protected]) writes from Georgia.