A Democratic state senator from Portland is breaking ranks with Gov. John Baldacci on the governor's plan to help balance the state budget by selling future lottery revenue. But it remains to be seen if that defection is isolated or the first sign that support is crumbling within the governor's party.
Sen. Ethan Strimling, one of 19 Democrats in the 35-member Senate, said Wednesday he cannot support borrowing $250 million from an investor and repaying it by selling lottery revenue. Strimling said the plan "is not a good one for the state of Maine" and he will vote against the budget if it includes that proposal.
Strimling is the first Democrat in the Senate to openly break rank with Baldacci on the lottery plan. His decision will be noteworthy if other Democrats follow suit because the plan already has come under attack from the Legislature's Republicans.
Baldacci's $5.7 billion budget for the two years starting July 1 would sell as much as $400 million in lottery revenue over the next decade in exchange for a $250 million payment now. The governor would like to sell this revenue to the Maine State Retirement System, which could use the money to help pay down the pension system's $3 billion debt. But Baldacci is prepared to seek other investors if the retirement system bows out.
David Wakelin, head of the pension system's board of trustees, told the Legislature's Labor Committee last week that the pension system probably would have to charge the state a higher interest rate than the state would get if it borrowed the money elsewhere. Strimling co-chairs the Labor Committee.
Baldacci, who opposes raising the sales tax or the income tax, argues that selling future lottery revenue to pull in $250 million for school funding and tax relief is better than cutting programs to save the same amount of money. The administration notes that other states have sold lottery revenue, so the idea is not untested.
"The alternative to it is drastic cuts," said Assistant House Majority Leader Robert Duplessie, D-Westbrook. "I don't want to see any more cuts."
Strimling countered Wednesday that the plan would relinquish a decade's worth of revenue to plug a $250 million hole in the budget. The state would continue to be short of cash in the budget after that, Strimling said, but the $250 million would be gone and the state's lottery revenue would shrink as the state paid back the loan.
Strimling said all alternatives should be on the table, including applying the sales tax to tax-exempt services, to raise money. He noted that Moody's Investors Services, a rating agency whose scores affect the interest rates on state loans, has placed Maine's bond rating on its watch list, in part because of the lottery idea.
Rebecca Wyke, Baldacci's finance commissioner, said Wednesday that the proposed budget includes money-making plans that would more than make up for the lost lottery revenue.
"I think there's a lot of people who are uncomfortable with this plan" in the Senate's Democratic majority, Strimling said, so other senators are likely to follow suit. But some Democrats cautioned against reading too much into his opposition.
"I don't attach any particular significance to it at this point," said Senate Majority Leader Michael Brennan, D-Portland.
Strimling "is out there by himself" as far as the Senate Democrats are concerned, said Sen. Joseph Perry, D-Bangor.
Strimling is doing his job as a legislator by weighing in on the lottery plan, said Lynn Kippax, Baldacci's spokesman, but his opposition "does not sound the death knell" for the proposal.