Mainers don’t buy budget gimmicks

Let’s get this straight. If the news reports are correct, Gov. John Baldacci claimed in 2003 he would use “no gimmicks” to buoy the state budget. Yet he leased out the state’s liquor retail operations during that budget cycle to secure $125 million.

This year, he’s looking elsewhere – but not too far – to the Maine State Lottery for added budget revenues. The governor wants to capitalize the state’s lottery revenue for 10 years, paying out $40 million a year to an upfront lender who shells out $250 million this year to balance the budget and provide property tax relief.

Some columnists predict such “gimmickry” would prove costly: borrowing $250 million at an interest rate of 9.6 percent may end up costing nearly $150 million in future state revenues.

And the pundits are not the only ones watching the governor’s – as well as the Legislature’s-machinations. Last Friday, it was reported that Moody’s Investors Service, a Wall Street investment firm, placed Maine on its “watchlist” because of the state’s failure to replenish cash reserves and because of its borrowing patterns.

According to reports, Moody’s warned that Maine’s general obligation bond rating could be downgraded, forcing the state to pay a higher interest rate for any new debts assumed. And there will be debts – let us assume – if a bond package estimated at some $200 million passes legislative deliberation.

The governor’s recently announced budget proposal totals $5.7 billion. Moody’s – while noting the state had narrowed its budgetary gap from two years ago – reported that the $733 million deficit reflected in the coming budget makes up 13 percent of the state’s operation budget.

“In Moody’s view, this deficit financing would result in a budget shortfall in the subsequent biennium [2008-2009] both in terms of lost property tax revenues and reduced lottery revenues flowing to the [state],” Moody’s press release stated.

That’s a lot to swallow (let alone digest) for the bulk of Maine residents who reportedly approve of Baldacci’s first two years in office despite their gloominess over Maine’s economic outlook. And they have their own “watchlist.”

In fact, a survey recently conducted by Strategic Marketing Services in Portland showed that half of the Mainers surveyed believe the state’s economy is on the wrong track. A total of 32.5 percent of them rate jobs, employment and economy as the most important issues facing Maine today.

Interestingly, 56 percent of those surveyed said they would support a combination of increased taxes and budget cuts to close the two-year $733 million gap; 36 percent said they would rely solely on budget cuts, while only 3 percent favored a plan that only raised taxes.

Nobody – from Wall Street’s Moody’s to Route 1’s Moody’s Diner – said they’d borrow from Peter to pay Paul … or Mary. Or depend on liquor and lottery revenues to run the state.