UPDATE McCormick got the dealers to give the state’s clients a slightly better price. But now prices are sky high, and a recession threatens. “This will reach way into the middle class,” she says of the “horrendous” cost of heating oil. She feels she can’t do anything else to bring the dealers down in price.
In 2006, to augment LIHEAP, Baldacci accepted $5.5 million from oil-rich Venezuela’s socialist president Hugo Chavez, but after Chavez insulted President George W. Bush by calling him a “devil,” Baldacci said he wouldn’t take more Venezuelan aid. Yet Bush supports fewer LIHEAP dollars despite the higher heating-oil costs. From a poor person’s perspective, who’s the devil?
THE FUTURE? The heating-oil crisis could be a big test in early 2008 for Baldacci and the State House Democrats. The picture will not be pretty if elderly poor people freeze in their trailers while rich Republicans and professional-class Democrats snuggle up in their McMansions or old Colonials.
State government, however, faces a current-biennium shortfall of more than $100 million, so Baldacci is refusing to support a state appropriation for LIHEAP. He backed one in 2006, of $5 million. This year, he is considering opening “warming centers” so people can keep their thermostats down during the day. Mostly, he is banking on congressional Democrats pushing extra LIHEAP funds past Bush.
To fix the budget shortfall, Baldacci and Democratic leaders (not to mention Republicans) talk only about cutting expenditures — cutting services, not largesse to business such as the annual hundreds of millions of dollars in state “tax expenditures,” a/k/a tax breaks.
On December 18, Baldacci unilaterally made the first cuts, of $38 million in this fiscal year’s budget, largely to services for mentally ill and developmentally disabled people, children, and the elderly — and a big cut of state aid to schools. The Legislature will have to agree to make these cuts permanent. In a news conference, he dismissed the idea of a tax increase and seemed uninterested in tax reform or eliminating business tax breaks. So the poor and disabled once again will bear the brunt.
Discount sales of state assets
THE ISSUE Baldacci has a penchant for one-time sales at bargain-basement prices of valuable state assets in order to bridge budget gaps.THE STORIES In 2004 he and the Legislature sold Wall Street investors the state’s lucrative wholesale hard-liquor monopoly for $125 million. In 2005, I reported that the state’s forgoing of liquor revenue could mean a loss of up to $275 million more than the administration had claimed. If Republican state senator Peter Mills hadn’t inserted a 10-year expiration clause as the sale measure flew by in the middle of a State House night, the franchise would have been sold off forever. The investors who got this tasty deal were clients of Severin Beliveau, arch-lobbyist and Baldacci fundraiser.
UPDATE In 2005, Baldacci tried to obtain $450 million by pledging the state’s lottery and other revenues in a bond. The Democrats pushed this plan through the Legislature, but Mills led a referendum drive to block it, arguing it represented fiscal imprudence of the highest order. Baldacci and the Democrats relented and instead raised the tobacco tax and cut more government services.
