Democrats Wednesday passed a state budget that borrows $447 million to help pay the bills, and they did it with the slimmest of margins – one vote in the Senate and three in the House.
Deliberations on the budget – twice postponed because Democrats didn’t have the votes they needed in the House – began late Tuesday evening and continued into Wednesday, with dozens of amendments proposed, but only a few adopted.
Those amendments removed the $10 registration fee for kayaks, rowboats and canoes; eliminated a plan to study the idea of charging a fee to hikers and bird-watchers walking on state land; and, reduced, but did not eliminate, fee increases for not wearing your seatbelt.
There were two Democratic holdouts in the House – representatives Joanne Twomey of Biddeford and Barbara Merrill of Appleton – and one in the Senate, Sen. John Nutting of Androscoggin County. The only Republican to vote for the budget was Rep. Gerald Davis of Falmouth.
The hard part to swallow for both parties was the need to support borrowing to pay the bills in the governor’s $5.7 billion two-year plan.
Gov. John Baldacci originally had proposed selling $400 million in lottery revenue for $250 million in upfront cash to fill the budget hole largely created because the state is paying a greater share of education costs. The state would essentially have been paying 8 percent or more in interest on the money and would have been without the bulk of the lottery revenue stream for the next 10 years.
The Appropriations Committee instead recommended selling $447 million in revenue bonds – representing the first time the state has floated bonds to pay operating expenses. The sweetener in that plan is it allows the state to make some early payments on its $2.9 billion state retirement system debt, saving millions in interest. And, interest on the bonds is around 5 percent.
Unlike general obligation bonds, which pay for things like transportation improvements and Land for Maine’s Future investments, the revenue bonds need only majority approval in the Legislature and don’t need to go out to referendum.
Divided on borrowing
While many criticized the borrowing in the plan, Rep. Glenn Cummings of Portland, the majority leader, called it a necessary “investment” in our future. “Just like working families,” he said, “we couldn’t write the full check” for increased aid to schools, demanded by voters last June.
Republicans countered that borrowing for anything but paying down the retirement debt was mortgaging the state’s future and endangering our bond rating on Wall Street.
“This is not a bad bill. It’s a terrible bill,” said Republican Sen. Karl Turner of Cumberland. Not only does it borrow to pay operating costs, “not a single penny…went to the voters for approval.”
Republican after Republican also criticized the budget for doing nothing to reduce predicted deficits in the years ahead. Already the state is expecting to be more than $600 million in the hole in 2008-2009.
Democrats, however, said they had no choice.
“We’re asked to assume that government can run like a business,” said Sen. Lynn Bromley of South Portland, but businesses don’t keep the old and sick on their payroll. The government, she said, has the responsibility to take care of them.
“To assume we love this borrowing scheme, we don’t…I don’t,” she said. “It’s tough to swallow, but critical to do so.”
Bromley listed the services, departments and university and community college programs that would have to be cut to balance the budget without the borrowing and concluded that no one could support it.
Sen. William Diamond of Windham hit a similar note. While he said it made good businesses sense to borrow to pay down the retirement debt, “I’m not terribly thrilled,” about borrowing to pay for operating costs, largely in increased education aid.
“But I’m not one whose going to be supporting taxes,” he said, and “I couldn’t find where we could responsibly cut $250 million” out of spending in the budget.
He challenged his Republican colleagues to give him a list of responsible cuts if they oppose the bonding plan. “I need some specificity.”
Both parties agreed that changes needed to be made in smaller line items in the budget.
In order to get their members on board, Democratic leadership announced last week its plan to take out so called “irritants” in the budget, including the kayak fees. They also proposed more moderate increases in seat belt fines in the budget, and kept not buckling up a secondary offense – instead of allowing police to pull people over based solely on the fact they were not wearing their belts.
The new fines for drivers and passengers not wearing a belt will be $50 for the first offense, $125 for the second and $250 for the third.
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