🔒A tighter ship

LePage to propose oversight agency

• Office to take broader look than OPEGA
• Focus to fall on policies, implementation

Gov. Paul LePage will propose creating a new state agency within his office to take over some planning office functions as well as ensure programs are managed efficiently.

LePage plans to form the Office of Policy and Management during the second session of the Legislature. "Whether it is an inspector general, or an Office of Management and Budget, which is what we are trying to implement now, we are going down that path," LePage said. "We need that type of office."

When he managed Marden's, the discount retailer used "secret shoppers" to measure employee performance and check whether stores were implementing policies. "We need that in state government," LePage said. "We need to know what is really happening."

Jonathan Nass, a senior policy adviser to LePage, is working on the details of the proposed new agency, which will go to the Legislature in January. He said the new agency will focus on government policies and the management of programs to implement those policies, but will not include the budget function, which will remain in the Department of Administrative and Financial Services. A working group is examining ways to implement LePage's plan to reform the existing State Planning Office, including reallocating its functions to other agencies and focusing on its core responsibilities.

Unlike the Legislature's Office of Program Evaluation and Government Accountability, the new office would look at programs in a more systematic way, rather than "the issue of the day" that OPEGA probes, Nass said. As an example, he cited a possible review of all the various groups and associations to which state agencies belong. "We are not sure we have a handle on how many of these we belong to," he said. "We could start with identifying all of them and then ask should we belong to them. What are we getting for being a member of a particular group?"

Nass said an inspector general function is needed in an organization with thousands of workers and hundreds of managers in programs providing a wide range of services. "This is a way for the governor to connect directly with the front lines of government and do it in a way that you are going to get an honest and firsthand account of how government is actually working," he said.

Tax collectors battle new technology

• 'Zappers' alter sales records
• Maine estimated to lose $81M

The most popular way for businesses to cheat on sales taxes used to be setting up two cash registers, one that got reported to the state and one that didn't. But today, tax collectors are battling increasingly sophisticated computer programs that are more difficult to detect.

"There is always somebody trying to find a new way to cheat," said Jerome Gerard, acting executive director of Maine Revenue Services. Some lawmakers are concerned the state is losing significant revenue from the latest computer technology, called "zappers," because they alter sales records in a more subtle way that still yields a lot of cash for the seller. Richard Ainsworth, a Boston University professor who is considered an expert on the technology, said he estimates Maine is losing $81 million in sales tax revenue every year.

An example of how the zapper programs work: A restaurant charges $6 for a burger and fries combo, but the software alters that after the sale to just a $4 burger sale. In Maine, that would mean the restaurant owner takes in 14 cents that should be paid in taxes.

"It's clearly subversive and against our process of treating people fairly, equitably and everyone paying their fair share of the tax burden," said Rep. Gary Knight, R-Livermore Falls, co-chairman of the taxation committee. "I would suggest that zappers be outlawed in this state."

"Zappers are something that Maine Revenue Services is not able to track; it is a very difficult enforcement problem," said Rep. Seth Berry, D-Bowdoinham, the lead Democrat on the committee.

Gerard says MRS has several tools for ensuring retailers pay the sales taxes they've collected from customers. "Our approach is rather old fashioned, but it has worked pretty well," he said. His staff examines the vendor sales to a retailer or restaurant and does a "mark up analysis" to estimate what the seller is expected to pay for sales taxes. If there is a significant discrepancy between the amount paid to the state and what the analysis indicates, the business is asked to explain, he said.

Delegation girds for budget deadlines

• Deficit talks, budget-writing overlap
• Spending for ongoing programs at risk

Congress is facing a difficult month with a new panel looking at spending cuts to reduce the federal deficit and completing budgets for federal agencies due by Oct. 1, the start of the new fiscal year.

"We have been given absolutely no guidance whatsoever as far as the target, the amount of savings we are supposed to produce," said Sen. Susan Collins. "And we have to finish the work on all of the budget bills for the new budget year, or fashion a continuing resolution, all while the deficit panel is working."

Collins, a member of the appropriations committee and the ranking member of the Homeland Security and Governmental Affairs Committee, said the deficit panel has also asked the chairs and ranking members of the various committees to prepare a list of cuts they would propose. "You really can't set priorities when you don't know what the target is," she said.

Rep. Mike Michaud said the attempt may end in budgetary disaster. The 12 members named to the deficit "super committee" are all strong-willed and he is not sure they will agree on a proposal to send to the full Congress. "If they do not, then you will see severe cuts across the board in the Department of Defense and in discretionary spending," he said.

Michaud said the "uncharted waters" of a deficit committee working at the same time as budgets are being crafted could result in a serious disruption of spending for ongoing programs. He doubts a new budget will be passed, and that a continuing resolution will be adopted.

Sen. Olympia Snowe said Congress has made a bad situation worse by not passing a budget for next year before tackling deficit reduction. She doubts a budget will be passed by the end of the month and expects another continuing resolution to fund government. "It has been a travesty that Congress has been unable or unwilling to act on budget bills for the last two years," she said. "It will make a very difficult process with the super committee all the more difficult."

Rep. Chellie Pingree said she doubts a budget will be adopted, but believes a continuing resolution will pass to allow government to operate until January, after the deadline for deficit reduction legislation. "The truth is, if we are going to do serious deficit reduction we have to get into looking at defense cuts," she said. "I think that we have to look at revenue enhancement, we have to make millionaires pay their fair share and corporations pay taxes again."

Snowe and Collins are co-sponsoring legislation that would require all of the negotiations be made public.

Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz. Read more of Mal's columns here.