House Dems to caucus on bonds, taxes

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AUGUSTA – The blame game over the Legislature’s failure to approve tax relief and bond packages in the last session will get kicked up a notch Monday when House Democrats convene for an unusual summer conference.

The afternoon meeting, known as a caucus in political circles, will also provide a forum for two prominent state representatives to demonstrate why either should be elected speaker of the House when the new Legislature convenes in January.

House Majority Leader John Richardson of Brunswick has been challenged by Rep. Ben Dudley of Portland. A member of the Legislature’s Appropriations Committee, Dudley is perceived by some rank-and-file members as an energetic, progressive lawmaker who could set a new tone for House Democrats. Richardson rose through the leadership seats in the House and is viewed as a moderate and stabilizing voice among Democrats.

The aspirations of both incumbents pivot on their re-election to office and the likelihood of Democrats keeping their majority in the House this fall. The actual ability of the majority to wield power in the Legislative also will pose a hot topic for Democrats on Monday. The party has controlled the House, Senate and governor’s office for the last two years.

Despite their numbers, Democrats were unable to reach agreement on a tax reform or bond packages when lawmakers pulled an all-nighter April 30, the last day of the legislative session. At the time, legislators knew voters faced two citizens initiative ballot questions that promised to pack a wallop for state and local tax policies.

Public opinion surveyors such as MaryEllen FitzGerald of Critical Insights and Patrick Murphy of Strategic Marketing Services, both in Portland, claim voters are turned off by the Legislature’s failure to implement complicated issues like tax reform. Some Democrats are concerned the public’s apparent dissatisfaction with the majority’s performance could have consequences for candidates seeking re-election to the Legislature this fall.

There is a “need to do something” according to several lawmakers who see Monday’s meeting as an opportunity to either reach agreement on a plan or hold minority Republicans responsible for the impasse on tax reform and bonding.

“If the Democrats come up with some ideas that will improve the situation, that’s not good for [Republicans], who choose to be obstructive right now,” Dudley said. “I think it’s irresponsible.”

“These Democrats are just trying to save face,” said House GOP leader Joe Bruno of Raymond. “And that’s because they weren’t able to accomplish anything when they had the majority. Now they want to show the public that they really care about these issues and want to do something about them.”

Convoluted issues

On June 8, 19 percent of Maine voters did what 186 lawmakers couldn’t when they approved Question 1 requiring the Legislature to identify about $250 million in revenue by June 30, 2005. The money would be used to raise the state’s share of local education costs from about 43 percent to 55 percent to lower local property taxes. Many communities are considering joining a coalition headed by Brewer City Manager Steve Bost dedicated to using additional Q1 revenues to lower mill rates.

State government officials and politicians are uneasy over the additional educational funding directive that arrives in the midst of a State House atmosphere permeated by program reductions, budget deficits and proposed tax increases.

Democrats in the House and Senate are divided on tax reform proposals with many House Democrats favoring a moderate approach to beefing up existing tax relief plans not underwritten by a tax hike. Senate Democrats, and more than a few House Democrats, signed on to a more ambitious plan funded by an expansion in the sales tax from 5 cents to 6 cents.

If the demands of meeting Question 1’s goals are not daunting enough, lawmakers are also conflicted over their inability to present an unequivocal position to voters on the Nov. 2 tax-cap ballot question. Commonly referred to as the “Palesky initiative” in honor of its leading proponent, tax activist Carol Palesky of Topsham, the legislation would roll back municipal mill rates to $10 per $1,000 valuation. It also would sharply limit the level of future new taxes a city or town could impose.

Municipal officials, who claim their budgets would be cut in half by the tax cap, made fruitless appeals to lawmakers to find an alternative that would render the fall ballot question irrelevant.

GOP resists borrowing

The second major obstacle of the legislative session focused on a fall bond package that never got off the ground since borrowing proposals require two-thirds support in the House and Senate to go out to referendum. Even if all of the Democrats in the Legislature were on board for the shape of a bond package, they would still need the support of Republicans to meet the supermajority threshold.

Republican lightning rods like Bruno and Senate GOP leader Paul Davis of Sangerville remain adamantly opposed to the governor’s suggestion of convening a special session this summer to address tax reform or the bond package. Majority Democrats, they argued, offered little in way of compromise to entice GOP lawmakers into supporting either proposal.

Republicans wanted to scale back the Dirigo Health program because they didn’t believe it was affordable. The GOP minority also desperately tried to get Democrats to agree to a constitutional cap on state, county and municipal spending. Democrats rejected both suggestions and faulted Republicans for demanding unreasonable concessions. Then they rammed a majority supplemental budget through both houses that left the GOP on the sidelines.

There was so much resentment over that tactic among Republicans that the repercussions have now assumed the form of a court suit over special session pay triggered by the majority budget vote.

Now Democrats and Baldacci – who went along with the Democratic majority budget – need Republicans to move a bond package, but GOP leaders have little reason to encourage support for the borrowing plan. Davis and Bruno both agree there is no pressing need to offer a bond proposal in November. If one is needed, they say, the new Legislature can place it on the June ballot next year.

Republicans generally tend to take a dim view on borrowing and supported a $30 million bond plan in April. House Democrats and Baldacci were looking at a package that had originally come in at about $120 million and ultimately pared down to about $80 million. Divisions between Democrats and Republicans converged to render a two-thirds vote unimaginable.

Lawmakers on both sides of the aisle are concerned that a projected $900 million gap between ongoing state programs and the receipt of anticipated tax revenues will couple with the added demands of Q1 to make next year’s budget negotiations one of the toughest ever. If the state’s economy continues its predicted sluggish pace toward recovery and interest rates trend upward, Democrats worry that Maine voters might not support a large bond package next year.

Senate Democrats have responded favorably to Baldacci’s call for a special session later this summer on a bond package and issued a written statement to that effect this week. Senate President Beverly Daggett, D-Augusta and Sens. Sharon A. Treat, D-Farmingdale, Ken Gagnon, D-Waterville, and Mary Cathcart, D-Orono, said bonds ensuring the viability of the Land For Maine’s Future Program were high priorities along with the remaining environmental, transportation and education bonds. The Senate Democrats’ statement was silent on tax reform. Daggett said there are no plans to send a delegation to the House Democratic meeting Monday, since they “weren’t invited” to the confab.

In the absence of consensus Monday on either bonds or tax reform, House Democrats could tear out a page from their Senate counterparts’ play book and lay the failure of both issues at the feet of Republicans.

“I am disappointed that, thus far, we have not been able to reach agreement with our Republican colleagues,” Daggett said.

“We supported a compromise bond package during the legislative session this year, but could not secure the necessary Republican votes,” added Cathcart.

Baldacci has new bond plan

Early Friday afternoon, the governor gave notice to legislative leaders of his intent to submit a new $55 million bond package for consideration by the Legislature’s Appropriations Committee. The plan is half of what was proposed by Senate Democrats and more than what Republicans were willing to approve earlier this year.

The bond would provide $30 million for the Land For Maine’s Future Program; $11.75 million targeted largely for the Waldo-Hancock Bridge, including about $2 million earmarked for port and ferry improvements; and a little more than $13 million for environmental upgrades with an emphasis on water-quality improvements.

Should Baldacci succeed in obtaining a two-thirds vote from the Appropriations Committee on some form of a bond package, he would have greater incentive to call lawmakers back into special session this summer. But Daggett said Friday that supermajority approval from the committee did not necessarily translate into two-thirds in the House and Senate.

“I certainly don’t think we want to be in the position of coming in and not having anything close to an agreement beforehand,” Daggett said. “So it’s important for leadership to have an idea where their [members] are.”

“I believe that we have the opportunity to build a bipartisan agreement on a targeted bond package,” Baldacci wrote in his letter to legislative leaders adding that funding for “essential investments should not wait for nine or 12 months for action.”

The governor’s latest and well-timed bond offer will be food for thought for leaders of both parties who have perceived Baldacci as a late and erratic entrant to the tax relief and bonding discussions.

Suspicions over Baldacci’s sometimes-arcane approach to consensus building were seemingly confirmed by all legislative leaders early this week. While the governor reached out to lawmakers in a plea for unity on bonds, his communications director, Lee Umphrey, issued a statement that some viewed as largely dismissive of the legislative process.

When trying to explain Tuesday why the governor was urging people to put pressure on lawmakers to support a special session on bonds, Umphrey said Baldacci was going “directly to the people now that the Legislature is out and the building is empty. But, you know, even when they’re in the building, the building’s still empty.”

Baldacci immediately received calls from legislative leaders in addition to the House speaker’s and Senate president’s office, all of whom were offended that a top aide to the governor would trivialize the work of elected lawmakers. Demands ranged from the suggestion that Umphrey be fired or, at the least, issue an apology to the Legislature. The Governor’s Office indicated neither was apt to happen any time soon. Umphrey’s response Friday was consistent with his intended spirit of the remark, which he said was meant to offer a little levity at a time when humor seemed to be in short supply.

“Well it looks like leadership was able to reach consensus on at least one point,” Umphrey said. “They apparently don’t like me.”