Baldacci: Cap State Spending?

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Baldacci: Cap State Spending?

Lewiston Sun Journal
4/28/03Baldacci wants to put governor on state spending engine
By Christopher Williams
Staff Writer Gov. John Baldacci is seeking to cap state spending and funnel most of the resulting surplus into a savings account.The measure would limit spending during good economic times. The excess money would be used to offset revenue shortfalls during bad times.He is expected Wednesday to pitch proposed legislation to state lawmakers. "I do think it's important to cap spending," Baldacci told reporters Tuesday during a budget briefing.State government already has a savings account called the Rainy Day Fund, where year-end surpluses can be stashed. But deposits to that account are discretionary and generally inconsistent.By 2001, the Legislature had socked away just $143 million, not nearly enough to offset a projected decline in revenues estimated at more than $1 billion over the next two years, starting in July.Under the terms of his new plan, spending increases would be linked directly to incomes of Maine families averaged over a 10-year period, Baldacci said. That average today would be about 4.5 percent, said Michael Allen, chief economist at Maine Revenue Services. Had Baldacci's plan been in place for the past five years, the Rainy Day Fund would have collected $386 million, Allen said.On the savings side, half of the surpluses would be earmarked for the savings account; and one-quarter would be used to pay down the unfunded liability of the Maine State Retirement System. Fifteen percent would go to a reserve fund to cover shortfalls during the fiscal year. Ten percent would be put aside to help pay for major capital improvement projects.Legislative leaders had mixed reaction to the proposal Tuesday.While he favors the notion generally, House Minority Leader Joe Bruno, R-Raymond, said simply passing a law is unlikely to curb future spending."Unless you put it in the (Maine) Constitution, it's not worth very much," he said. To do that would take two-thirds votes by both legislative bodies plus a majority of voters at a statewide referendum.State government has seen statutory caps come and go because they can be easily changed by a willing Legislature, he said. Still, he supported the concept as a first step and applauded Baldacci for seeking to tackle overspending, noting the state's budget has mushroomed 70 percent over the past eight years.House Speaker Pat Colwell, D-Gardiner, disagreed with Bruno's call for a constitutional amendment."I don't think we need to do that," he said. "I don't know why we need to be overly pessimistic."Colwell said the Legislature likely will pass something similar to Baldacci's proposal after it has had a chance to review the details and "put its stamp on it." Once the law is in place, lawmakers can better judge whether something more binding is needed."Let's have a little trust and see what the Legislature can do," he said.At the other end of the State House, Senate President Beverly Daggett, D-Augusta, was lukewarm on the idea.Maine's revenues are as volatile as they are because the state's tax structure needs to be broadened, she said."If those problems are fixed with tax reform, then the stabilization fund becomes less critical," she said.Moreover, Daggett said stockpiling huge surpluses in a state savings account might not be in taxpayers' best interests."For government to create a big rainy day fund is questionable," she said. "Why isn't that money better off in taxpayers' pockets?"Former Gov. Angus King tried several times to pass a plan similar to Baldacci's proposed Budget Stabilization Fund but King's plan failed to muster legislative support.cwilliams@sunjournal.com [url=http://www.sunjournal.com/story.asp?slg=043003spendingkap]http://www.sun...