AUGUSTA – As debate begins on how much lawmakers should ask Maine voters to borrow this November, Republicans released their analysis showing the state owes four times as much as what residents have been told.

Republicans used the report to warn there’s a limit to what the state can afford to borrow.

Rep. Sawin Millett, R-Waterford, and Sen. Peter Mills, R-Skowhegan, said the state’s debt is closer to 20 percent of revenue, not the 5 percent figure used by Gov. John Baldacci’s administration.

“It would surprise the citizens to know we’re this far in debt,” Millett said. “It would amaze them to know that of these items listed here, the only one the public ever sees is this little general obligation bond package” that appears on the ballots.

“They don’t see the rest of this,” Millett said, referring to an itemized list of what Republicans consider state debt.

The difference hinges on the definition of “debt.”

When talking about his $197 million bond proposal and state debt, Baldacci counts the general obligation bond debt of $400 million already approved by voters, plus $198 million in loans the state has taken out through the Government Facilities Authority, said Rebecca Wyke, commissioner of the Department of Administrative and Financial Services. That’s money the state owes to investors, versus “money the state owes itself,” she said.

The Republican analysis goes further, looking at other obligations, including $3 billion owed to the state retirement plan, $80 million in Medicaid payments owed to hospitals, a $125 million loan paid off by giving up state liquor revenue for 10 years, a $250 million loan proposed to be paid by giving up 10 years of state lottery income, and $60 million in workers compensation claims.

Mills said he was disturbed with the frequency that the Legislature has borrowed in recent years “without getting public approval of any kind.”

The public hears about bonds that must be approved by voters but may not know that the state owes money to hospitals, to the pension plan or has given up liquor sale income, he said.

Baldacci’s current budget proposes to sell off most of the state lottery proceeds for 10 years for $250 million “simply to keep the store open in this year’s budget,” Mills said.

Republicans don’t like that, because it means giving up $40 million a year for the next 10 years. “That’s the kind of borrowing that catches up with you,” Millett said. Instead, the state should cut programs, he said.

Republicans insisted they are not opposed to a November bond package, but that before residents are asked to borrow more, the state should present the entire debt picture, Mills said.

And the spending cap that was passed on Jan. 20 as part of the property tax relief package should apply to the amount the state borrows, Millett said.

Wyke disagreed that the public is not made aware of Maine’s debt. What Maine discloses is consistent with what other states do, she said.

The three agencies that give Maine its bond rating are aware, for instance, of the state’s obligations to the state pension plan, Wyke said, which she described as money the state owes itself. “Every state has similar pictures,” she said.

The bond rating agencies still consider Maine’s borrowing conservative, she added. “That’s why we enjoy the AA rating we have.”

State Treasurer David Lemoine, a former Democratic lawmaker heavily involved in tax issues, disagreed with the Republican claims. Hundreds of millions of the “debt” cited by GOP lawmakers, including sale of the state wholesale liquor business and proposed sale of lottery revenues, are not tax-supported debts, he said.

Lemoine added that Republicans paint an incomplete picture by highlighting state debts without accounting for their potential to generate new revenues.

“The question is, how does that debt support economic growth?” he said.

The Associated Press contributed to this report.


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