AUGUSTA – A year after Maine’s first publicly funded elections, state overseers are still wrestling with the issue of what kind of expenditures are permissible for a taxpayer-financed candidate.

Payments to family and friends? Large outlays for meals? Travel reimbursement? Rent? Communications services? Purchases of clothing?

A case involving all of that has been pending for months before the state Commission on Governmental Ethics and Election Practices. At the commission’s meeting in October, panelists who took up the matter appeared uniformly upset.

“The sense of outrage is palpable in this room,” said commission member Michael Carpenter, who formerly served as a state senator and state attorney general.

When it comes to public financing, Carpenter said, “it’s not to set up a personal piggy bank for people to go and enjoy themselves.”

The significance of the case probably goes beyond its particulars.

In last year’s legislative races, 134 candidates for the House and Senate ran with optional public funding after agreeing to forgo private donations. Overall spending by the so-called Clean Elections participants was about $865,000, according to William Hain, the executive director of the ethics panel.

Besides a new pool of money available for legislative candidates next year, candidates for governor could become eligible for considerably more.

Maximum payments to an individual Clean Elections candidate for governor stand to reach nearly $1.2 million.

The pending case concerns expenditures by Loren Bailey of Falmouth, a political neophyte recruited by the Democratic Party to contest a popular incumbent Republican senator, Joel Abromson, in District 27, which comprises Falmouth, Long Island and part of Portland.

Bailey, who was authorized to spend a total of $27,948 on his publicly financed campaign under a complex Clean Elections formula, was never regarded as a serious challenger but managed to take 36 percent of the November 2000 vote.

Along the way, in what has drawn sharp scrutiny by election overseers, Bailey reported expenditures of more than $3,000 – of his total campaign spending of nearly $26,000 – on 49 meals for himself and others, state officials said.

Billings for 14 of the meals exceeded $60, according to a commission analysis, and seven topped $100.

According to Bailey’s written responses to commission inquiries, one dinner for four cost $330 and nine guests attended a post-election campaign function costing close to $600.

A lawyer for Bailey warns that Clean Elections overseers ought not to get entangled in retroactive judgments of campaign decision-making.

“Staff – including relatives – were paid some stipends to assist in the campaign. Outside contractors for financial reporting and campaign strategy were engaged, and campaign volunteers or staff were regularly treated to meals as the campaign progressed,” attorney James Cloutier told the commission in a letter dated Sept. 4, 2001.

“While other candidates might be able to generate volunteers, and other campaigns might choose to hire outside contractors instead of trying to maintain volunteer marginally remunerated staff goodwill, this is a judgment call which cannot be reasonably evaluated after the fact,” Cloutier wrote.

Last December, Bailey – who returned $2,057.41 in authorized but unspent funds, according to ethics commission officials – wrote the commission checks of $705.37 for “campaign clothing” and $217.76 for “car repair.”

Other items remain under review in the aftermath of the commission’s October meeting. Cloutier and Hain said last week talks were under way with an eye toward resolving outstanding differences.

“There are obviously some ambiguities,” Cloutier said.

Meanwhile, a prominent Clean Elections advocate says improper spending by candidates would undermine support for public financing.

“The abuse of public funds does threaten the public’s faith in our system,” Alison Smith of Maine Citizens for Clean Elections told the ethics committee last month.