Democrats guardedly optimistic on budget

AUGUSTA – Gathering his Democrats around him as a deadline for amendments loomed, House Speaker John Richardson told lawmakers Wednesday the stakes couldn’t be higher if the majority party’s $5.8 billion state budget is defeated.

“This is about people’s lives,” the Brunswick representative said as a hush descended on the Democratic meeting. “People will die.”

If Republicans were supposed to be walking around the State House with blood on their hands for insisting on more cuts in state programs and services Wednesday, there were no obvious acts of repentance.

“Was he talking about members of his caucus?” asked House Republican leader David Bowles of Sanford.

Republicans and Democrats seemed to be drifting farther and farther apart late Wednesday afternoon as the number of proposed House and Senate amendments to LD 468 surpassed 65 – even though Richardson had hoped Democratic House members would display some restraint. Although it is unlikely all of the amendments will be offered, the heavy load of proposed changes to the budget bill tends to suggest there is something less than unanimity among Democrats on the tax-and-spending plan. Richardson said more Democratic support is needed.

“We’re very close to passing this majority budget,” he said. “But we need help.”

Democrats hold 76 seats in the House to the Republicans’ 73. The entire membership reaches 151 with the inclusion of one unenrolled member and one Green Independent, both of whom are more inclined to vote with Democrats than with Republicans. Voting on the budget, approved 8-5 Saturday by majority Democrats on the Appropriations Committee, will begin in the House today, and the loss of only three affirmative votes would imperil the Democratic proposal.

Republicans are urging Democrats to slow down on the budget proposal and enact instead a continuing resolution to pay for operating state government from July through September to allow for further discussion of several complex issues within the budget. Democrats want to pass their majority budget by March 31 and then adjourn to allow their bill to become law 90 days later and by the start of the next fiscal year on July 1. Shortly after the adjournment, Gov. John E. Baldacci would call the Legislature back into “special or emergency” session to complete its work on various bills.

Although the “emergency” is self-serving, Democrats would prefer to bypass Republicans by using the maneuver than be forced to compromise with the GOP to reach the two-thirds majority vote needed to have the budget take effect by the beginning of the new fiscal year. The House Calendar lists the statutory date for adjournment as June 15.

The governor originally proposed a $5.7 billion, two-year budget, and Democrats agreed Wednesday that their majority budget is about $40 million more than the Baldacci plan. Negotiations between Republicans and Democrats had been marked by steady progress and even produced a bipartisan compromise to seek a 14-year, $415 million state revenue bond. The borrowing plan was preferred by both parties as an alternative to Baldacci’s solution of lending out up to $40 million a year in state lottery revenues for 10 years in exchange for an upfront payment of $250 million needed to increase the state’s share of local education costs.

Republicans and Democrats, at the time, also were interested in rejecting Baldacci’s plan to lengthen the repayment schedule on the state retirement debt from 14 to 28 years, a proposal that would cost the state an additional $3.6 billion in interest payments over the life of the loan.

Republicans ultimately decided they could agree to the borrowing plan if Democrats would consider taking steps to reduce state spending cuts by about $215 million through departmental restructuring and program cuts. Democrats balked and ultimately passed a larger budget than originally envisioned by the governor that borrows up to $450 million through the state revenue bond.

The majority budget also jettisons Baldacci’s lottery sell-off, but keeps the longer state retirement system debt schedule while paying a lump sum $120 million on the loan principal to achieve about $1 billion in savings. The bond also will provide about $66 million for replenishing the state’s Budget Stabilization Fund that some Wall Street bond houses have criticized for being too low.

Because the revenue bond does require the full faith and credit of the state, the Legislature can enact it without voter approval. The Maine Attorney General’s Office directed Democratic leaders to guarantee the repayment on the state revenue bond by identifying a revenue stream to satisfy the annual $45 million repayment.

Democrats responded by creating a trust fund that will be funded by 14 different sources but will rely primarily on the state’s estimated $51 million in annual lottery revenues and a projected $20 million from the state’s share of anticipated annual Bangor racino revenues. The exact percentage and mix of the $45 million payment will be up to the state controller under the bill.

Moody’s Investors Service warned the state earlier this year that it could downgrade Maine’s bond rating based on the lottery loan plan and low cash reserves. Such action would increase the interest rate Maine has to pay on the money it borrows.

“The administration and the majority party has chosen to simply address those two issues and have borrowed substantially more than we would have proposed in an effort to be more acceptable to the banks,” said Rep. Sawin Millett, R-Waterford. “This reflects no attempt to live within our means and amounts to ongoing deficit spending using a very large credit card.”

Democrats who might be inclined to question the borrowing piece were warned against considering the GOP’s continuing resolution by House Majority Leader Glenn Cummings of Portland, who said Republicans clearly had not prepared a counterbudget, preferring to allow Democrats to make a purported $425 million in difficult and painful spending cuts in state programs and services. House staff said they were unable Wednesday to meet State House reporters’ requests for a breakdown of the $425 million in reductions.

“They want us to do their dirty work,” Cummings said.

Rep. Joseph Brannigan, D-Portland and House chairman of the Appropriations Committee, also cautioned Democrats against the GOP plan, predicting nothing would be gained by “three months of battles.”

“We’re not going to delay this any longer, it will be this [majority budget] or a two-thirds budget,” he said.

Richardson alleged that Republicans came to him last week and told him they wanted $215 million in cuts, including to some state health care programs, and they wanted to eliminate 500 jobs held by Maine state employees.

“If you’re a Democrat, those are fighting words,” Richardson said. “We said: ‘We can’t do this to our people.’ But if we don’t pass this budget by March 31, it will happen.”

Bowles denied seeking the elimination of the state workers’ jobs, but he did confirm that Republicans wanted to get rid of more than 100 vacant state positions that remain funded in the budget as part of his overall $215 million in state spending cuts.

Acknowledging that some Democrats may have problems with aspects of the majority budget including increasing seat belt violations from $65 to $212; imposing $10 fees on canoes and kayaks, and providing additional funding for substance abuse programs, Richardson asked his members to rely on members of the Appropriations Committee, committee chairmen and leadership for guidance.

“We see it,” Richardson said of the majority budget. “We see it for what it is, and you have to trust us that what we’re doing is the right thing.”