One would think from the plethora of self-congratulatory backslaps in Augusta that our state government has finally managed to tackle the difficult issues of high taxes and runaway spending. Can it be true? Has order been restored to our fiscal house?

Most people – including our lawmakers – never strain the staple on the massive proposed law that is our biennial state budget. This year, Gov. John Baldacci’s $5.7 billion offering to the Legislature is 560 pages long. At its essence, the proposed budget is the governor’s expression of his priorities for governing Maine and his blueprint for managing state government.

Most state budgets have certain regrettable features – gimmickry and folderol that would make even an Enron auditor blush. Usually such inclusions are enacted with an embarrassed lowering of the legislative chin. But the audacious scope of the current offering of budgetary flimflam is only surpassed by the chutzpah displayed in the governor’s crowing about his fiscal discipline.

Here is a sampling of Gov. Baldacci’s “fixes” to our government’s fiscal problems:

The Kenny Rogers Caper. Apologies to the tunesmith of “The Gambler,” but the governor goes well beyond just “counting your money while he’s sitting at the table.” He would spend in the current budget the majority of the state’s gambling proceeds for the next 10 years. “Securitizing” the lottery revenue means turning $400 million between now and 2015 into $250 million that the governor will spend in the next 24 months. That will deprive his successor in the Blaine House from a lot of revenue to meet Gov. Baldacci’s many promises.

Max Out the Credit Card. Thirty years ago, Gov. Longley stopped paying enough into the Maine State Retirement System to cover its future obligations to retired state workers. This is known in the State House as the “unfunded liability.” Over the past few years, the state has contributed more money toward this outstanding liability than is required by the Maine Constitution. But last session the Baldacci administration put us on the longest payback schedule allowed, adding hundreds of millions to the carrying costs of this debt. The state’s required contribution next year is about $160 million, more than 5 percent of the budget.

Dirigo Stealth. The governor and his staff continue to complain about the federal government not meeting its commitment to Medicaid funding. Two years ago, Maine’s reimbursement rate under the program suffered a drop of a few percentage points because of our changed income levels. Sen. Susan Collins fought for and won an amendment that provided a cushion to our state’s lower rate, providing $54 million in windfall funding that was supposed to be spent on current programs. Instead, Gov. Baldacci used the money to start a new program – Dirigo Health – that so far is itself failing to meet its promises.

The Granny Tax. The Baldacci budget would impose a brand new tax targeted on Maine’s elderly. Under the proposal, a person who decides to rent an apartment in an assisted living facility would pay a 5 percent “lodging” tax. That same person, living in their home and receiving the same services, would not be taxed. This new tax would cost my own grandmother $900 a year. Cynically, Baldacci aides try to confuse the issue with the tax-and-match scheme on hospitals and nursing homes that are used to draw down federal Medicaid funds. According to the Portland Press Herald, the new tax will “ensure the state continues to receive as much federal funding as possible.” What they don’t say is that the tax does this only by depleting people’s private funds more quickly so they end up on government aid. In other words, the Baldacci plan is to tax my grandmother into poverty and drive her onto Medicaid so they can get your federal tax dollars faster.

Print and Pray. Remember the ballyhooed merger of the two behemoth state agencies, the Department of Human Services and the Department of Behavioral and Developmental Services, that was to save $5 million per year? No? That’s OK. The folks in Augusta didn’t expect you to remember that. They just printed those savings in the budget and prayed they would come true. They didn’t. But now they have offered another long list of print-and-pray items in the current budget. Some are actually repeats of ideas that failed to produce savings last year. Several legislative committees already have reviewed a number of these pretend savings and have, in rare bipartisan display, rejected them unanimously.

Upon taking office three years ago, Gov. Baldacci promised a budget that “contains no gimmicks” (Budget Address, 2002). A year later the governor reiterated, “Now is the time for fiscal restraint and discipline” (Budget Address, 2003). In the 2004 State of the State address, he said, “We need to keep our fiscal house in order.”

But two months ago, the governor’s spokesman, Lee Umphrey, was forced to admit that gimmickry had found its way into the current budget proposal (Lewiston Sun-Journal, Jan. 8, 2005). Gov. Baldacci said in this year’s State of the State, “The best thing we in state government can do is to practice what we preach. So we are.”

Hmm.

Richard A. Bennett, a former president of the Maine Senate, is a consultant in corporate governance. He lives in Norway, and may be contacted at rbennett@megalink.net.

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