Solutions for budget dwindling Impasse triggers need for two-thirds majority

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AUGUSTA – Stalemated budget negotiators with the Maine House and the governor’s office will ponder their dwindling options this week in the shadow of a new and resolute “supersized” Maine Senate.

Gov. Angus S. King’s entrenched positions on the state’s $5 billion, two-year budget won overwhelming support in the House last week. At that time, Republican and Democratic caucus leaders urged their members to hold their noses and vote for budget provisions that repulsed them. It was better, they reasoned, to support the negotiated package unanimously approved by the Legislature’s Appropriations Committee.

If that budget proposal – which many Republicans and Democrats said more closely resembled the governor’s creation than the Legislature’s – could have been enacted by midnight Saturday, only a simple majority would have been required in both chambers. And to send a clear message of their determination to the Senate, the House members voted 111-29 in favor of the Appropriations Committee’s budget – 10 votes more than the number needed for two-thirds approval.

Budget enactment looked like a slam-dunk for the committee, King and the House. What they and almost everyone else never counted on was that the Republicans and Democrats in the Senate would put aside old enmities to join forces and craft their own budget. Senators passed it Thursday in an astonishing 31-4 vote. Not only did this weekend’s negotiations between the House and Senate fail to produce a compromise, but the impasse also triggered the need for a two-thirds majority agreement to pass the budget. The Legislature now is not scheduled to meet again until Tuesday.

The Saturday deadline was key to some budget strategists because funding agreements must be in place before the state’s fiscal year expires on June 30. Had the Legislature enacted the budget before midnight Saturday, the spending package would only have needed a simple majority for passage and the bill would not become law until June 29, 90 days after it would have been signed by the governor. Now the measure will require a two-thirds vote in both houses so the budget bill can become law before the fiscal year expires.

The fact that a compromise could not be reached over the weekend may have disappointed House leaders, but most senators couldn’t be happier. The Legislature’s statutory date for adjournment is June 20 and there is now no great hurry to rush to agreement on the spending package. Time, in fact, is on the Senate’s side. The 31 senators will probably pick up three more votes, leaving independent Sen. Jill Goldthwait of Bar Harbor to stand alone on principle for the Appropriations Committee budget she helped to craft and now defends.

Meanwhile, dissent is mounting in the House over the Appropriation Committee’s budget and Senate leaders know it. Although a motion to adopt the Senate’s budget failed 109-33 in the House Friday, opposition is expected to dissipate quickly. Senators and lobbyists upset with aspects of the Appropriations Committee’s budget will pressure the state representatives vigorously this week in an attempt to build the two-thirds support necessary in the House.

By Friday, the governor may have a budget bill on his desk that scarcely resembles the spending plan he unveiled in January. And any veto would be overridden in the House and Senate. It’s a very different scenario than the one envisioned by nearly all parties three months ago.

The new order

It’s been 15 years since the Maine Senate has had a veto-proof majority with 24 Democrats and 11 Republicans. Long a flash point for partisan warfare, this year’s Maine Senate is composed of 17 Democrats, 17 Republicans and one independent. Ignoring deep-seated, philosophical differences and long-held positions of mutual mistrust, the senators resolved some partisan disagreements in January by agreeing to share power.

The new order elected veteran Democratic Sen. Michael E. Michaud of East Millinocket as its president this year with the understanding that GOP Sen. Rick Bennett of Norway would assume the presiding officer’s post next year. As an acknowledgment of the important role Goldthwait could play as a tie-breaker on partisan votes, the leadership team agreed to appoint her as Senate chairwoman of the Appropriations Committee. The 13-member panel of lawmakers reviews and recommends action to the full Legislature on the state budget and other spending initiatives.

Only three of the Appropriations Committee’s seats are held by senators. The remaining 10 are filled by House members, which would suggest that any budget agreement would more closely resemble a version palatable to state representatives. Assuming neither Democrats nor Republicans in the Senate wanted to assume hard partisan positions that would leave Goldthwait to cast the deciding vote, leaders in the Maine House and King eagerly embraced the role of shaping the two-phase budget document with the goal of enacting a measure with enough compromises to get a simple majority vote.

The budget

King originally submitted a “Part 1” or “current services” budget that included nearly $74 million in new taxes. The bulk of the new revenues were composed of a 26-cent-per-pack increase in the cigarette tax and an extension of the current 7-cent meals and lodging tax to restaurants that do not serve alcohol. He also sought to bridge Medicaid costs by lengthening the repayment schedule on the Maine State Retirement System debt to save $35.5 million. King’s budget fulfilled his promise to close the state’s remaining 27 liquor stores and lay off their 70 full-time employees to save $5 million. It retained a $50 million Learning Technology Fund, sometimes referred to as the governor’s “laptop computer fund.” King left the Rainy Day Fund, pegged at around $5 million when he assumed office in 1995, at nearly $145 million.

The Appropriations Committee process eventually produced a unanimous compromise budget that had the support of House leadership and the governor. It dipped into the Rainy Day Fund to cover the $35.5 million needed to scrap King’s plans for the retirement debt. It kept the tax increases and boosted the Fund for a Healthy Maine from King’s proposed $10.6 million to $44.9 million. It closed the liquor stores and left aid to local education intact with a 5 percent increase over current allocations in the first half of the budget cycle and 3 percent in the second half. The Rainy Day Fund was still healthy with about $110 million and the $50 million “laptop” fund had survived unscathed.

In the aftermath of the 111-29 House vote, the governor, Goldthwait and House Democratic and Republican leaders congratulated each other, albeit grudgingly in some cases, on reaching a budget compromise. What they didn’t know was that the real negotiations for the budget were just getting under way in the Senate.

What if?

From the beginning, suspicions existed among some Senate Republicans that their representative on the Appropriations Committee, Sen. Peter Mills of Cornville, was a little more independent than caucus leaders liked. A few Senate Democrats held similar views of Sen. Mary Cathcart, the Orono Democrat who represented her caucus on the committee. The Appropriations Committee, headed by Goldthwait, reported out a compromise bill that senators on both sides of the aisle concluded had compromised too much, too soon.

What if, just this once, the Senate’s Democrats and Republicans could put their differences aside and assemble enough votes together on a competing package, guaranteeing the 24 votes needed for a two-thirds, veto-proof supermajority.

The notion was too intriguing to dismiss out of hand. Ultimately, Senate leaders collaborated after learning of each other’s disappointment with the budget. Under the expertise of Michaud, a veteran Appropriations Committee member and its most recent former Senate chairman, and Bennett, who also previously served on the Appropriations Committee, the budget was rapidly crunched to address the legislators’ chief concerns. A little after 10 p.m. Thursday, 31 senators voted for the new budget amendment, which differed from the previously approved package by only $8,000.

Not only did it meet most of the Democrats’ concerns about program reductions and state job cuts, it also addressed Republican worries over tax increases. More important, from the perspectives of Bennett and Michaud, the new amended budget gained its funding by zapping initiatives desperately sought and protected by Maine’s independent governor. Many senators and more than just a few state representatives were unhappy with King’s plans for more taxes, which they believed were being imposed to save a Rainy Day Fund and laptop fund at taxpayers’ expense.

Others viewed the situation as one in which Mainers were being taxed more and not getting the services they deserved at the expense of King’s priorities. The Senate’s amended budget took $68 million from the Rainy Day Fund to cover the loss of revenue from King’s tax increases, which were deleted from the bill. The amended budget incorporated the laptop fund into the Rainy Day Fund, which drops to $85 million, but continued to dedicate its share of laptop interest earned to the school technology fund. It closed only five liquor stores by the end of this year, with the intent of closing the remaining 22 stores in two years.

Other elements of the Senate budget that earned even broader support came from the nursing home industry, which had no idea how it would pay a nonnegotiable 3 percent cost-of-living-allowance to its employees. King had hoped to deal with those and other requests in the “Part 2” segment of the budget, but the Senate version paid for the needed $4.8 million in “Part 1.” The Senate budget also provided $4 million more for the Fund for Healthy Maine, for child care and returned $3.1 million more to Maine communities in revenue sharing.

In essence, the Senate budget gave Democrats and Republicans a lot more of what they wanted. But it gave King a lot less.

The next move

Reaction to the Senate plan was swift. Nearly in tears, Goldthwait rose to speak from the floor Thursday night and used words like “betrayal” as she deplored the Senate’s decision to turn its back on the committee process that allowed for so much public participation and discussion. Efforts by Senate leaders to commend Goldthwait and her committee for doing “95 percent of the work” went nowhere.

If Goldthwait was angry with the Senate, then House leaders were outraged. House Republican Leader Joseph Bruno of Raymond exchanged an icy greeting with Bennett when offered to speak with the 61-member House GOP caucus Friday. By contrast, House Speaker Michael Saxl’s 89 Democrats were getting downright rowdy during their caucus that afternoon. Several challenged Democratic leaders and expressed support for the Senate budget. The entire debate seemed to hit bottom when Millinocket Rep. Joe Clark told Saxl his northern Maine constituents hadn’t sent him to the State House “to kiss anybody’s ass.” Saxl’s expression revealed that the Portland representative understood the implication of Clark’s remark.

Bruno found himself in the unenviable position of defending the governor’s $70 million in tax increases to many Republicans who had taken a campaign pledge against supporting any budget that contained new taxes. Both House leaders were angry that the Senate had devised its new budget without consulting them. Publicly, Senate and House leaders claimed this weekend to be pursuing budget negotiations, but those behind the scenes maintained that little was going on. House leaders, they said, have a little more healing ahead of them before substantial talks can take place.

More than at any other time in his six years in office, King feels angry and isolated as a result of the Senate’s budget plan. The independent governor has not been shy about sounding off to anyone who wants to listen, comparing the late-night vote to the bombing of Pearl Harbor by the Imperial Japanese Air Force. He called the Senate’s decision fiscally irresponsible and unworkable and even went so far as to impugn the motives of the amended budget’s chief architects. Bennett and Michaud are considering runs for the 2nd Congressional District seat and the governor suggested that both would like to use the budget issue as campaign fodder.

“Almost everyone up here thought that was a little below the belt,” said one Senate staffer, referring to the governor’s remarks.

Future options for House leaders seem painfully limited. They can try to work with their Senate counterparts to achieve some symbolic change in the amended budget that at least leaves their thumbprint on the document. Or they can spend a few more days – possibly even weeks – howling about the Senate’s arrogance and their exclusion from the process.

In the meantime, Senate leadership expects more and more House members to rally to their budget plan until the supermajority emerges to enact the budget.

The alternative is an impasse that stretches beyond the Legislature’s expected June 20 adjournment – a prospect that King and Maine’s 186 lawmakers find even more repulsive than any state budget.