By Bonnie Washuk,Staff Writer

AUGUSTA – Gov. John Baldacci’s plan to sell future state lottery income to help close a budget deficit is in trouble, if Wednesday’s comments by two Democrats and a negative committee vote Tuesday are indicators.

But Baldacci says he’s unwilling to raise taxes or slash services if his $250 million plan is removed from his budget. He said he’s confident lawmakers will realize there are no better options.

At issue is Baldacci’s proposal to sell most of the state lottery’s profits for the next 10 years, possibly to the Maine State Retirement System. The state would give up about $400 million in profits over that time in exchange for $250 million now to help close a $733 million budget gap.

On Wednesday, Sen. John Nutting, D-Leeds, and Sen. Ethan Strimling, D-Portland, who are Democrats, as is the governor, called the lottery profit sale a gimmick that would use one-time money to fix a long-term budget problem.

Their opposition followed a Labor Committee’s unanimous vote against the plan Tuesday night. That vote came after David Wakelin of the Maine State Retirement System told the Labor Committee that his system would need a better rate of return than the rate the state would pay.

Republicans have disliked the idea since it was first proposed Jan. 7.

Strimling, Nutting and Republicans said Wednesday the lottery proposal is in trouble. “There’s growing opposition to this idea,” Strimling said. “We need to start talking now about what’s the alternative.”

Nutting said he was in the House of Representatives in 1992 when former Gov. John McKernan balanced the budget by borrowing from the State Retirement System. “I opposed that budget. I felt it was better to make cuts and broaden the sales tax base,” Nutting said.

Baldacci’s lottery sale proposal is similar to that, Nutting said. He said he favors higher taxes on recreation, meals and lodging, as well as cuts in government, such as a reduction in the number of state administrators.

“The final straw for me was we’re going to get $250 million now, and we’re going to pay $40 million for 10 years,” costing taxpayers $150 million, Nutting said. If Maine faces more tough economic times, it wouldn’t have that lottery revenue and the $250 million also would be gone, he said.

Last year, the state gave up millions after selling the liquor business, Nutting said. “We’re dooming ourselves and making sure we can’t deal with the next economic downtown because of all these cash schemes.”

Strimling said lawmakers have been told they’re faced with the choice of making “a fiscally imprudent decision or throwing babies out on the street. I reject that choice. Neither is acceptable,” he said. Legislators should “have a conversation on how do we protect services and make financially prudent decisions,” he said.

Baldacci characterized the Labor Committee’s opposition as “part of the legislative process,” and insisted that selling lottery income wouldn’t cause future budget problems because the economy and tax revenues are growing and, through restructuring, government costs will come down, he said.

Selling the lottery revenue to help the budget, which protects social services and provides property tax relief, “is the best of a lot of difficult choices,” Baldacci said. “What are the options?”

His budget proposal meets the state’s responsibilities while investing in job growth, he said. Selling lottery revenue is a way to respond to homeowners’ recent demands for property tax relief and for a greater share of state money for local education costs, Baldacci said.

In two years, the budget deficit is projected to be about $600,000, “half of what we confronted when we first took office,” Baldacci said. “We’re making progress.”