Friday, April 18, 2014
By Michael Shepherd email@example.com
Independent U.S. Senate candidate Angus King channels one of Ronald Reagan's famous debate lines in his latest TV ad, hitting groups advertising against King by saying "There they go again" with false claims.
His short, simple message about his record as governor in the ad -- that state government cut taxes 18 times without a deficit -- is half-true. He's right on taxes, but we're not giving King the full range to say there was no deficit in state budgets during his tenure.
Maine can't pay for budget deficits by law -- that's his point. But projections for future deficits, called structural gaps, often dictate biennial budgeting processes in Augusta by pinpointing the number between what's projected to be spent and what Maine will need to hold the line on services.
The state deficit is a different type of deficit from the ever-growing federal deficit and any attempt to treat them equally is absurd. But it does have an impact on Maine budgets.
"When I was governor we cut taxes 18 times ..."
Data provided by the Maine Revenues Services bears this out: from 1995 to 2001, state government cut taxes 18 times. It also raised taxes seven times. On net, taxpayers won.
That all adds up to a net tax reduction of $429 million in fiscal year 2003 relative to what it would have been without cuts. The largest single cut was the repeal of the hospital assessment tax, which cost the state more than $170 million in lost revenue by fiscal year 2003.
On the other side of the ledger, two large, King-backed cigarette tax increases hit smokers hard. By the end of the King administration, the cigarette tax went from 37 cents per pack to $1. The tax gained the state more than $61 million in revenue in fiscal year 2003.
Verdict: There were 18 tax cuts in the King administration and Maine's tax burden was reduced. King could have counted increases too, but it doesn't seem dishonest given the large net cut.
We rate this statement true.
"... and there was no deficit."
This is a battle of semantics that's been a political football all through the Senate race.
Let's start with the bottom line: the state can't pass unbalanced budgets, according to Maine law, which prohibits deficit financing. Each Legislature and governor has to balance the state's budget every fiscal year. So if you're talking about Maine budgets in the present tense, they're balanced.
But projected deficits, also termed shortfalls or structural gaps, happen pretty regularly in Maine, when future projections for revenue and appropriations fall short of what's needed to cover spending. Legislatures and governors must close gaps to balance the budget.
King inherited a projected shortfall when he took office in 1995. A state chart shows that there were projected shortfalls that had to be closed in three of the four budget cycles he managed.
He presided over the state's last projected structural surplus, estimated for the 2000-2001 budget cycle. When he left office, a $1 billion shortfall was projected for the 2004-2005 budget, driven largely by a tanking economy after the attacks of Sept. 11, 2001. The upcoming Legislature is also facing a projected deficit.
Sometimes the projected gaps are referred to as projected deficits, both by officials and by media. The Maine Republican Party has pointed out times when news reports and King himself have used the word "deficit."
Whether it's called a structural gap, shortfall or deficit, if the prefacing word is "projected," it's right. By the end of the budgeting process, Maine must balance the budget because tax money can't br used to finance gaps or shortfalls.
Verdict: King hates the term "deficit," but there's is no disputing that when he left office, income was projected to fall about $1 billion short of expenditures. That meets the definition of a type of deficit, a word King has used in discussing the state budget, if it is prefaced with "projected." The gap had to be closed and was closed. This boils down to a quibble over language surrounding a perfectly common Augusta budgeting phenomenon.
We rate this statement false.
For the ad overall, King hits one and misses one here. He could have given a little more information on tax increases, but that claim is sourced and legitimate. When it comes to a deficit, there's just no finessing the gap.
We rate this ad half-true.
Michael Shepherd -- 621-5632