Did Angus King Leave Maine With a $1 Billion Deficit?

When Angus King finished his second term as Governor of Maine in January 2003, he left the state with a $1.2 billion deficit, according to the Maine Republican Party.

But in television ads paid for by his independent campaign for Senate, King claims that when he left office “there was no deficit.”

Who’s telling the truth?

On Friday, Maine’s Morning Sentinel published their fact check on King’s claim that “there was no deficit” and concluded his statement was false:

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.

Or deficits.

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. (emphasis added)

In Maine, the State Legislature passes budgets that cover a two year period. Every other January, in years ending in odd numbers, the governor submits his proposed budget for the state for the next two fiscal years. After some deliberation by the state legislature and some jockeying back and forth with the governor, a final two year (bienniel) budget is approved, usually within three or four months. Each fiscal year begins on July 1, and ends on the following June 30.

Angus King was first elected governor of Maine in November, 1994. He was inaugurated in January, 1995, just weeks shortly after his predecessor, Republican governor John McKernan,  submitted a bienniel budget for the two fiscal years 1996-1997 that projected a surplus of $300 million. A few weeks later, on January 27, 1995, the newly inaugurated Governor was in Washington, D.C., where he told C-SPAN:

“In our state our biggest issue is a structural budget deficit. That’s the problem we’ve got to deal with immediately.”

When King’s predecessor, Republican John McKernan, submitted his bienniel governor’s budget to the Maine State Legislature in January, 1995 for the Fiscal Years 1996-1997, it projected a $300 million surplus.

Eight years later, when King submitted his own final biennial governor’s budget to the Maine State Legislature in January, 2003 for the fiscal years 2004-2005, it projected a $1.2 billion deficit.

According to the Maine Center for Economic Policy Newsletter, published in the summer of 2003,

“With the state facing a $1 billion shortfall, over 200 local officials, business leaders, nonprofit advocates, academics, and legislators turned out to hear presentations on the 04-05 biennial budget by Governor Baldacci [King’s successor] and his staff.”

Democrat John Baldacci, who succeeded King as governor and was left with the $1.2 billion deficit, has endorsed Democratic challenger Cynthia Dill, as Politico reported in August:

Former Maine Gov. John Baldacci sent out a fundraising appeal today for Democratic Senate candidate Cynthia Dill, marking one of the few instances of high-profile party support for the state legislator’s campaign.

Dill is running for the seat of retiring GOP Sen. Olympia Snowe, but has struggled to gain traction in a race dominated by independent former Gov. Angus King. The Democratic Senatorial Campaign Committee has not actively supported Dill and a number of deep-pocketed D.C. Democrats have raised money for King. (King has not said which party he’d caucus with in the Senate but has endorsed Obama for reelection.)

If other Democrats are betting that King will end up as a Democratic, or at least Democratic-friendly, vote in the Senate, Baldacci apparently isn’t making the same wager. The former two-term governor, who succeeded King in office, penned this appeal for Dill:

Can you contribute $12 to help Cynthia and to make sure Democrats maintain the majority in the U.S. Senate?

I’ve known Cynthia for many years, and she’s proven to be a strong advocate for her community, for progressive values and for expanding access to opportunity throughout Maine.

Baldacci, on whom the responsibility to clean up Angus King’s budget mess fell in 2003, endorsed Dill over King in the face of significant pressure from the elite liberal groups supporting King to back their man. Apparently Baldacci just can’t bring himself to back a predecessor whose record of financial irresponsibility made his own job as Governor of Maine so difficult when he took over the budget reins.