Baldacci raids the cookie jar

By LANCE TAPLEY  |  October 15, 2008

“If you’re going to play this on the up and up,” says Jay Finegan, the House Republicans’ spokesman, “they should have gone public about it,” speaking of the Baldacci administration’s approach to the borrowing. “This is a democracy.”

The administration, though, is still secretive about the issue. Harrington, the Dirigo director, was asked when she informed her board of directors about the borrowing, when she had talked with legislators about it, who among the governor’s staff knew about it, if the governor knew about it personally, and whether she had ever questioned its legality. She said she was unable to talk with this reporter, and her e-mailed replies were not responsive to the questions.

Can it be repaid?
A longtime legislative financial expert, Republican state Senator Peter Mills, of Cornville, calls “irresponsible” the Baldacci administration’s approach to funding Dirigo. “It’s scandalous to run up $20 million” even before this year’s savings offset payments had been determined, he says. The insurance superintendent recently pegged them at $49 million. Mills thinks business groups could tie them up in the courts for a long time, ensuring Dirigo’s payback to the treasury will be impossible by June 30.

But if the people’s veto prevails, Dirigo’s Harrington says, “We will be going back to the Legislature with a number of proposals asking for their assistance.” Mills is dubious, however, about Dirigo’s chances in the 124th Legislature. If Baldacci requests a Dirigo appropriation, “The House might support it,” Mills says, “but I can’t imagine the Senate will.” The House has a comfortable Democratic majority, but the Senate is closely divided, and these lineups are likely to continue after the November election. There is “no chance” of a legislative appropriation, Turner says flatly.

The chairman of the Dirigo Health board, Dr. Robert McAfee of Portland, who admits to being “concerned” about repaying the money, suggests that if all else fails the agency might be able to borrow from a private institution like a bank.

But Representative Giles, a banker for over 30 years, observes about Dirigo: “When you work with a company that is having financial problems, is running at a loss, whose goals are not met, and owes the state $20 million,” it must be viewed skeptically.

Dirigo ran into financial problems almost from inception. The state has appropriated little money for it apart from passing through a $53-million start-up grant from the federal government. The main funding mechanism, the savings offset payment system, has been rendered almost unworkable by the business opposition. As a result of underfunding, Dirigo’s insurance-policy subsidies have been too low and, therefore, the premiums have been too high for most of the working-class people it was designed to cover.

It’s expensive, too, for taxpayers. According to the conservative Maine Heritage Policy Center, which calls Dirigo a “costly failure,” the program so far has eaten up over $100 million in public funds. In the last fiscal year Dirigo spent $3.5 million for administration.

As well, many Maine liberals feel Baldacci has reneged on his promise to insure the uninsured.

Both Senators Mills and Turner — Republican moderates — voted for the bill that established Dirigo.

“Every promise has been broken” by the administration in regard to Dirigo, Turner now says. Mills calls the program “a dismal failure.”

Lance Tapley can be reached at ltapley@roadrunner.com.

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