Maine’s Pleasant Political Problem: Fate Of Surplus

AUGUSTA — The second regular session of the 119th Maine Legislature convenes in Augusta in less than a month, and it’s expected to be unlike any that has preceded it. That’s because lawmakers this time will have a huge surplus to work with.

The battle lines already are being drawn. The Democratic majority in both houses wants to use the funds for “unmet needs,” particularly education and health care. The Republicans want to cut taxes. And the Independent governor, Angus S. King, Jr., wants to do nothing with most of the money.

“He would say, ‘Go slow with it,'” says Dennis Bailey, King’s spokesman. “The economy’s good, the money’s coming in, he doesn’t want to make the mistakes of the 1980s, where we cut taxes and spent money at the same time, and then be in a pickle if the economy goes south in a year or two.”

House Speaker G. Steven Rowe, D-Portland, doesn’t quarrel with that sort of fiscal caution as a general principle. But he believes there’s a bigger problem confronting Maine.

“You can talk about reducing taxes, but it’s not going to raise the income level of Maine people. You can talk about putting the money aside for a rainy day, and that’s fine. But if we want to really, seriously deal with an economic downturn, then we will invest in the education of the people of this state and we will reduce the volatility of our tax base.” Rowe says.

According to State Sen. Richard A. Bennett, R-Norway, the assistant minority leader, the new session, which is expected to run from Jan. 5 through early April, will start with “a high profile debate on whether we should be spending this money on new and expanded programs, or should we do the fiscally responsible thing, which is return it to the people who overpaid it in their taxes.”

The Republican position may find strong voter support, since Maine has one of the highest tax rates and one of the lowest per capita income levels in the country. But Maine, at 12.7 percent, also has the highest percentage among the six New England states of people not covered by health insurance, something that could become “a real crisis,” the governor’s spokesman says.

Senate President Mark Lawrence, D-Kittery, an announced candidate for the U.S. Senate, is polling Mainers on the “most important issue: education, economic development or lower taxes?” He also is asking which is the most burdensome tax — property, income or sales — and what is the greatest health care concern.

The surprise surplus that Maine has now totals about $250 million, and about March the state will issue a recalculation that’s expected to add another $70 million to the pot. Plus, there is an initial $80 million payment from the settlement with the tobacco industry that will be up for grabs.

Bailey says the governor believes there may be a way to satisfy the wish lists of all sides in the spending debate.

“There are some unmet needs,” Bailey acknowledges. “We can use one-time expenditures, for construction for schools. And there may be ways to reduce some taxes. One of the things (King) wants to look at is the sales tax. It’s due to go down in July (from 5.5 percent to 5 percent). He may be able to accelerate that.”

King, who is not expected to release his legislative agenda until mid-January, has a pet project of his own: A $25 million facility to replace the mid-19th century Augusta Mental Health Institute.

That may be a hard sell, however. Bennett says King has “a lot of explaining to do” regarding the project. Senate Majority Leader Chellie Pingree, D-North Haven, says, “If we’re going to be building new buildings in this state, they ought to be schools.”

Overshadowing the upcoming session will be the November elections, something Bennett says will be “hard for legislators not to think about.”

Undoubtedly people will be looking at issues with a more overtly political eye,” he says.