Proposed budget changes still leave problem for future

AUGUSTA – Proposed budget changes offered Wednesday by Gov. Angus S. King are expected to have little or no effect on a huge problem that will confront Maine’s next governor and the 121st Legislature: a structural gap in the budget cycle for fiscal years 2004-2006 of between $500 million and $750 million.

The budget’s structural gap is a recurring and elusive deficit that represents the difference between projected state revenues and the costs of social service programs and other state spending initiatives that are influenced by built-in program growth or reductions in federal funding.

Budget writers like state Rep. Richard Nass, R-Acton, predicted Wednesday that the governor’s proposal to delay the implementation of a $21 million package to make the state tax structure conform to federal tax changes will only add to the structural gap. As the lead GOP House member on the Legislature’s Appropriations Committee, Nass said the next Legislature and governor will be humbled by the drastic cuts in state spending that will be needed to close the looming deficit.

“It’s going to be something between $700 and $750 million,” Nass said. “That’s what we’re being told. The full force of that figure is going to hit right on the next budget. I keep trying to talk about this with people, but they only want to talk about casinos. This $180 million deficit the governor’s trying to close now is small potatoes compared to what we’re going to be faced with in January. And nobody wants to go there.”

All five of Maine’s gubernatorial candidates claimed to be well aware Wednesday of the long shadow the structural gap will throw over discussions on the next legislative budget. 2nd District U.S. Rep. John Baldacci of Bangor, the Democratic nominee for governor, said he had dealt with budget deficits in the past and believed that a concept like the Productivity Realization Task Force initiated by King in 1995 was the best way to assess the problem and find solutions.

Baldacci plans to use a “Coordination Accountability Task Force” to provide similar results and tie state spending to the growth of the state domestic product, otherwise defined as the total value of all of the state’s goods and services in a given year.

“I think that when I recently talked [with the budget office workers] about performance-based budgeting there was room within the internal inter-agency area for us to further move forward [in a way] that hadn’t been fully developed up until this point,” Baldacci said. “So it’s our hope to be able to offer some suggestions about making some changes in certain areas and also to be able to come forward with this task force to be able to address our overall structural deficit. I think that’s what [the King] administration did when it was running for office. We’re going to present our plans in that area.”

Peter Cianchette of South Portland, and the Republican candidate for governor, was unavailable for comment Wednesday. But his campaign manager and spokesman, Roy Lenardson, said Cianchette believes an estimated $750 million structural gap only underscores his contention that Maine “has a huge spending problem.”

“Over the last eight years, spending has increased across the board by more than 60 percent, or more than twice the rate of inflation,” Lenardson said. “Peter says everything is on the table as far as spending is concerned. We don’t have a tax problem. We have a spending problem.”

Green Independent Party candidate Jonathan Carter of Lexington Township said Mainers might have to prepare for a return to the 6 percent sales tax, an increase of 50 cents on the cigarette tax and add another bracket in the income tax for Maine’s wealthiest residents to solve the deficit problem.

“The fact is we’re going to have to raise revenues to close that gap,” he said. “It’s disingenuous on the part of all my opponents – with the exception of David Flanagan – to suggest that we aren’t going to need new taxes.”

Flanagan, a Manchester independent, said the structural gap is too serious a problem to ignore. But he said adding new levels of taxation to a state perceived as the highest-taxed state in the country sends exactly the wrong message at exactly the wrong time.

“Unlike these other candidates, I’ve been through this as president of the Central Maine Power Co.,” he said. “Our goals in Maine have to be avoiding tax increases and capping spending at the rate of inflation in every category. We need an audit as a tool to reduce costs. We also need to look to other states who are doing the same things as we are either as well or better, but are doing them more cheaply. We’ll also have to do some restructuring of state government.”

State Rep. John Michael, an Auburn independent, said he would eliminate the structural gap by sweeping cuts to state programs that would be identified by a statewide audit.

“In this climate we can’t raise taxes, so we’ve got to start cutting,” Michael said. “Remember when we had all that surplus. They went crazy spending it. The governor and the Legislature wouldn’t listen to anybody. Surprise! Now it’s a few years later, we’re looking at a huge gap and it’s time to pay the piper.”