Maine retirement system wary of $250M Baldacci lottery plan

AUGUSTA – Gov. John Baldacci expressed optimism Friday that he can resolve concerns raised by a Maine State Retirement System official over the governor’s budget-balancing plan to borrow $250 million from the pension plan and repay it with future lottery revenues.

David Wakelin, chairman of the system’s board of directors, said Thursday the Maine State Retirement System is not sure it can legally trade future lottery revenues in exchange for money now.

“We are concerned that it may potentially be a violation of the federal tax laws that we have to operate under,” Wakelin said. He also added the state may be able to borrow that $250 million privately at a lower rate of interest.

Baldacci said Friday that his administration will discuss the securitization plan in detail with the retirement system, adding, “Those issues can be resolved.”

Baldacci’s budget includes a 10-year plan to sell up to $40 million a year in annual lottery revenues, or up to $400 million over the next decade, to an investor in exchange for $250 million now.

The Baldacci administration has discussed the plan with the retirement system in conceptual terms, but “we haven’t seen any specifics yet” and the board of directors is awaiting a formal proposal from the governor, Wakelin said.

That wait-and-see attitude could pose problems for Baldacci because the lottery plan is getting a lukewarm reception in the Legislature.

Some lawmakers, such as Republican Sen. Richard Nass of Acton, say selling future state revenues for a quick fix is a bad idea no matter the buyer.

But others, including Democratic Sen. Ethan Strimling of Portland and House Majority Leader Glenn Cummings, D-Portland, say the plan may be more acceptable to some if the buyer is the Maine State Retirement System.

Cummings said if lottery revenues dip and the state has a deal with a private investor, that buyer would apply “tremendous pressure on us to promote the lottery to a greater level than we are now.”

Baldacci said he would prefer to work out an agreement with the pension system rather than sell the lottery revenues on the open market.

Wakelin’s comments suggest lawmakers will have to take a stand on the lottery plan before anyone knows if the Maine State Retirement System is a buyer.