October 26, 2012

OUR OPINIONS: Budget deficits, budget gaps just not the same

Maine governors balance budgets. That's as true for Paul LePage as it was for John Baldacci. And it was true for Angus King.

No deficits. It's the law.

So why do we hear keep hearing about King leaving office in 2003 with a deficit? It's a willful mix-up between the way state and federal budgets are structured that supporters of Republican Charlie Summers are using to confuse voters.

It also has confused fact checkers, such as this newspaper's Truth Test team.

Voters should not be confused: Deficits on the state and federal level are not the same thing.

Maine governors and Legislatures are required to pass balanced budgets every two years. Those budgets are based in part on projections of future tax collections made by a panel of economists.

When it's time to build the next budget, state officials take the next two years' revenue projections and the department heads' estimates of the cost to maintain current services. If the projected costs are greater than the expected revenue, we have what some people refer to as a deficit, but what's known in Augusta as a "structural gap."

Before the next budget is finalized, however, the gap has to disappear. That is far different from a federal budget deficit that shows up at the end of the budget process, not at the beginning.

The federal government borrows money to fill the gap between what it has and what it spends. The state government cuts future spending. That's a big difference.

General economic conditions, not overspending, drives structural gaps on the state side. When incomes and consumer spending decline, so do tax collections.

Summers knows this, and although he cannot coordinate with the outside groups that are running these ads, he could disavow them.

These ads make charges that are simply not true.

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