Surplus numbers lead to debate over state fiscal policy

AUGUSTA – Gov. John Baldacci’s announcement of a sizable year-end General Fund surplus touched off some midsummer election-year back-and-forth between Democratic supporters and Republican critics that ranged well beyond the condition of the state’s financial coffers.

Just as Baldacci used the occasion of closing the books on fiscal 2006 Monday as an opportunity to favorably recap 31/2 years in the Blaine House, detractors looked beyond the margins to paint a bigger and gloomier picture.

“It’s not hard to save money when you don’t pay your bills,” assistant House Republican leader Josh Tardy of Newport said in a statement.

“It’s deceptive to claim the state has all this money in savings when we have a huge amount of outstanding debt, on the order of $5 billion. We currently owe Maine hospitals more than $300 million, and that debt is growing by $70 million a year.”

To get to $5 billion, Republican lawmakers include the state’s vast unfunded pension liability.

“We were on pace to have that paid off by 2018,” Senate Minority Leader Paul Davis of Sangerville said in the same statement, mixing up 2018 and 2019, “but the governor decided to stretch out the schedule to 2028. Instead of paying in $540 million over this two-year budget cycle, we’re paying in $362 million.

“Right there the governor has saved about $177 million. What he won’t tell you is that his scheme will cost Maine taxpayers about $2.5 billion in additional interest. That’s serious money. And the payments really balloon in the later years. By 2028, the required payment will be $574 million. He can campaign on his so-called savings, but he’s leaving a debt time bomb for taxpayers of the future,” Davis said.

Baldacci pegged the 2006 General Fund revenue surplus at about $74 million and said another $14 million in savings had been realized. In an accompanying press release, he offered a flattering context.

“I came into office in a challenging financial situation, with paper mills closing and our reserves depleted to zero,” the Baldacci statement said. “I promised then not to raise income and sales taxes to put Maine on sound financial footing and while it was difficult, I kept my promise. In addition, we created spending caps and reduced the states overall tax burden.”

Republican gubernatorial nominee Chandler Woodcock, the state senator from Farmington, had a statement distributed during the Baldacci news conference, focusing not on the revenue surplus but on what he described as a broader perception of the Maine economy.

“The current administration needs to candidly address the difficult challenges facing Maine,” Woodcock said. “The message being heard across the state is unmistakably clear – health care is too expensive, taxes are too high and government spending is out of control.”

A Democratic retort was not long in coming.

“Woodcock’s negative business message is bad for Maine’s business climate. His negativity discourages investment in our state and sends the wrong message to the business community. Woodcock’s doom and gloom hurts Maine. That’s not what leaders do,” state Rep. Ben Dudley of Portland, the chairman of the Maine Democratic Party, said in a statement of his own.