Portland’s welfare problem

The headline was shocking: “Portland faces $6 million in annual General Assistance cuts under LePage budget.”

That headline is from an article on Monday from Portland Press Herald staff reporter Kevin Miller. It certainly got my attention.

What, I wondered, would cause such a draconian cut in funding to Portland in the budget? According to the story, Portland is in line to potentially lose up to $6 million in General Assistance funds if the governor’s welfare reform proposals in his budget are implemented. That is not an insignificant number.

General Assistance is a core welfare program that assists Maine people in paying for things such as food, medicine, fuel and rent.

Cities and the state are collectively responsible for taking care of the needy through this program. The state pays for half of General Assistance costs for all municipalities up to a threshold, after which it begins paying 90 percent.  Most towns never hit the threshold. Portland not only exceeds that threshold, it crashes through it like Vince Wilfork trying to sack Russell Wilson this Sunday.

With the state paying the tab, there is very little incentive for larger cities to be judicious with its payouts. After all, they foot very little of the bill and can pass nearly all of the cost on to the state. They can spend indiscriminately without having to actually pay for it.

Still, most cities behave reasonably. For instance, according to the Department of Health and Human Services, in fiscal year 2010, Bangor spent $2,238,520 on the program, while in fiscal year 2014, it spent $2,170,253.

Lewiston, which has a similar number of residents in poverty (8,344) as Bangor (7,940), spent $920,566 in 2010, and $748,291 in 2014.

You notice the trends, I assume? General Assistance payments going down as the economy improves. That makes sense.

But what has happened in Portland?

The city has seen explosive growth in welfare payments. While the other large cities in Maine saw their General Assistance spending go down between 2010 and 2014, Portland increased its spending from $6,745,981 to $10,018,473.

Portland — a city of about 66,000 people, or about 5 percent of the total 1.3 million population of Maine — accounts for an unbelievable 56 percent of total spending on the General Assistance program.

Just for comparison’s sake, let’s compare Portland with the often forgotten Lewiston-Auburn metropolitan center, which for the purposes of this comparison we will — I think fairly — treat as a single city.

Portland has an estimated population of about 66,318, while Lewiston (36,437) and Auburn (22,987) combined for a population of 59,424. Portland has 13,662 residents in poverty, Lewiston and Auburn together have 11,815. More or less comparable all around.

In 2014, Portland spent the aforementioned $10,018,473 on General Assistance. Lewiston and Auburn together spent $887,713. Portland spends well over 10 times what a comparable metropolitan area spent in 2014.

I could keep citing numbers forever, but I think the point is made.

While other cities in Maine behaved responsibly with welfare payments, Portland saw a gravy train. With state reimbursements of 90 percent, paying for this explosive growth in the program became somebody else’s problem. That somebody else is the Maine taxpayer, of course.

The LePage proposal, which I wholeheartedly support, offers a far more rational way to deal with the state’s management of funding for this program. Instead of the 90 percent reimbursement, the state would pay 90 percent of a city’s costs until the city reaches 40 percent of the previous six-year average. At that point, the reimbursement would drop dramatically to 10 percent.

In other words, the state would cap the growth of the program and ensure that it is kept in line with the payments from previous years. After that cap is met, a city can still spend a great deal more, but in that instance, it will be on its dime, not the state’s.

According to DHHS Commissioner Mary Mayhew, nearly 60 percent of Maine towns would actually see more money under this proposed change. But it would mean that cities such as Portland, which have been financially irresponsible for years, would be forced into a more rational use of taxpayer funds.

That is a good thing for the health of the system. With a better use of state funds, and without so much of the treasury being wasted, Maine will have more money to recommit to the truly needy.

Matthew Gagnon

About Matthew Gagnon

Matthew Gagnon, of Yarmouth, is the Chief Executive Officer of the Maine Heritage Policy Center, a free market policy think tank based in Portland. Prior to Maine Heritage, he served as a senior strategist for the Republican Governors Association in Washington, D.C. Originally from Hampden, he has been involved with Maine politics for more than a decade.