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Alex Hammer

Putting Lipstick on a Pig
By Alex Hammer
Apr 16, 2006 - 8:42:00 PM

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I am reminded of a TV commercial from perhaps a couple of years ago (I do not watch much TV at the present, or in the past for that matter) in which (if memory serves) a supervisor was motivating, in an over the top manner, financial analysts, in regard to the supposed (likely imagined) virtues of a stock to sell to their customers. This was in the wake of the Wall Street scandal when as the market tanked analysts were not downgrading declining stocks. The conclusion and tagline of the commercial (maybe you’ve seen it too) is “Let’s put some lipstick on this pig”.


I wrote a PowerPoint presentation in 2005 entitled “Is Maine in a Mess?” that included newspaper coverage that began to startle even me in regard to the scope and depth of the problems that Maine has been experiencing. From that file comes the following (Note: each article or report listed is excerpted):

The Bangor Daily News on 5-11-05 reported:

”Gov. John E. Baldacci sounded upbeat and encouraged after his meeting Monday with Wall Street bond brokers, whom he described as generally supportive of Maine’s efforts to improve the state’s economic profile…Baldacci said Tuesday the $400 million borrowing proposal in the current budget didn’t come up with the financial representatives he met…House Minority Leader David R. Bowles, R-Sanford, was certain Wall Street had more on its mind than the people’s veto.”

The same paper, exactly only two weeks later, on 5-25-05, under the title “Maine’s Bond Rating Lowered” reported:

“Following through with a warning issued four months ago, Moody’s Investor’s services announced Tuesday it would drop Maine’s bond rating…’The downward pressure on Maine’s rating is driven largely by the steady narrowing of the state’s financial operations over the past several years as indicated by slow progress towards restoration of depleted reserves, (a) continuing tight liquidity position leading to four years of cash flow borrowing and the use of one-time solutions to balance the state’s operating budget’ Moody’s stated in a press release.”

The very same day, under the headline “States Take in Record $600B” USA Today reported:

”State government revenues are soaring again, ending a period of budget shortfalls…’We’ve come a long way, baby,’ says Massachusetts Gov. Mitt Romney…his state is on track for its second straight year of surpluses…In another sign that hard times are over, states borrowed 23% less in the first four months of 2005 than a year earlier, according to The Bond Buyer, a newspaper that tracks government finance.”

In March of 2005, the Maine Heritage Policy Center, in a document entitled “Crafting a Budget Maine People Can Afford” stated (caps, bold and underline as in original):

”THERE’S SPENDING, THEN THERE’S TOTAL SPENDING. One of the best kept secrets in Augusta is the total state budget. As revenue growth shifts outside of the General Fund Budget, more of the state spending decisions are occurring OUTSIDE of legislative scrutiny. In FY 2004 “Other Special Revenue Funds” came in at $2.92 billion, while General Fund expenditures were $2.58 billion. FY 2004 was the first year that General Fund Spending dropped below spending from Other Funds.”


“Take the fiscal year 2003 versus 2004. The Governor and many in the legislature would have you believe that state spending increased by 2%. That is a reasonable number by most standards. HOWEVER, spending in the “Other Funds” category increased by 16%! That’s about 800% higher than inflation. When you combine those two numbers, you will find that overall state spending increased by 9%.”

The Bangor Daily News on 4-15-05 in an article entitled “Racino developer buys Miller’s Bangor eatery, sold for $3.8M, to house slots” reported:

“Gov. John Baldacci, a Bangor native, initially opposed the racino. But after slots were approved in a November 2003 statewide vote, he put the project on a fast track by naming the advisory panel that ultimately became the Gambling Control Board. From a cell phone on the interstate, Baldacci said Thursday: ‘I’m very pleased that they’ve made the announcement and the commitment to get this up and running. I just really appreciate the board and the effort made by everybody in the community and around the state.’

The Bangor Daily News on 4-26-05 under the headline ”DHHS misspent $2.5M from U.S. Maine must repay money to feds” reported:

”The program that provides adoption assistance payments in the Department of Health and Human Services failed to follow federal law and rules in 403 out of 1,369 cases audited by the inspector general of the federal Department of Health and Human Services. It will cost Maine taxpayers at least $2.5 million.”


“Another major concern was lack of a judicial determination on the need to remove a child from a family in 234 cases…Members of the Legislature’s Health and Human Services Committee said they were not informed of the audit, even though it was started two years ago and state officials were given the preliminary findings earlier this year and agreed with the findings in a letter dated Feb. 28, 2005”


“The inspector general found that about 31 percent of all adoption assistance cases in the audit had some sort of error serious enough to disqualify the child for assistance.”

In The Fleecing of Maine: Financial Mismanagement Now Widespread in State Government, Reps. David Trahan and Jon McKane write, Sep 28, 2005 in the Magic City Morning Star:

“Question: Would you invest in a company whose auditor said that there were “inadequate controls over cash management?” How about if the examiner added that “expenditures were included twice” and that there were “overstated expenditures?” Would you trust a company whose audit report said that it “only partially claimed certain payroll expenditures” and that “cash was drawn in excess of expenditures?” Would you feel confident in a corporation found by inspectors to have “inaccurate federal financial reports?”

Of course not; not if you could help it. The problem is, you can’t help it – none of us can – because this “company” is the State of Maine. Through our taxes and fees, we have no choice but to “invest” in state programs and pay for state services. These quotes and many more like them come from the state’s most recent audit report and again illustrate Maine’s deplorable fiscal condition. The report for the previous year is almost identical. This is why our credit-worthiness has been downgraded by the three largest bond rating houses this year. This also is why investing guru Jim Cramer of CNBC’s “Mad Money” said on a recent radio interview, “If Maine were a stock, I would be selling!”

In The Fleecing of Maine: Taxes and Fees Suffocating Mainers Reps. David Trahan and Jon McKane write Oct 3, 2005 in the Magic City Morning Star:

“During the past summer, Governor Baldacci and the majority party campaigned on the theme of having lowered your tax burden and reduced the state spending increase to record lows.

In this column we will begin to unravel truth from fiction. We will peel away the budget gimmicks and cast away the Augusta double talk. And we will make clear the hard and honest facts of exactly what your state government did to keep you the highest taxed people in the country.

It is important to understand that there are two state budgets. One is the overall state budget that includes all federal and state spending. It totals about $6.3 billion a year. Under federal law, our state auditor must complete what is called a Federally Mandated Single Audit for this budget. The audit insures that all monies are distributed to the proper agencies. Despite these controls, we can see by reading the Single Audit that some federal money can be “redirected.”

The Appropriations budget is different. This budget is the Legislature’s spending bill for all of the money collected through state taxes and fees. Totaling about $3 billion a year, this budget is a breeding ground for gimmicks and smoke and mirrors accounting. It is also the birth place of special interest payouts. Unfortunately, even for the most experienced lawyers, it is virtually impossible to decode the dense statutory language, the endless numbers and countless pages of convoluted columns and codes.

Clever and experienced politicians in power know this. If they choose to, they can bury whatever they want in the mind-numbing miasma of spending and legal codes without detection. No one, including the press, seems interested in or capable of deciphering the schemes and gimmicks buried in Appropriations budgets.

Until now. After months of pouring over budget data supplied by the non-partisan Office of Fiscal and Program Review (OFPR) for the years covering the Baldacci administration, this is some of what we found:

The Governor and the Legislature have raised more than 83 different tax and fee line items totaling approximately $775 million. These include everything from the new slot machine taxes to increases in hunting licenses and commercial fishing licenses, and even a new $7 on-line fire permit. There were fertilizer fees, surcharges on pet food, the kitten and puppy tax, park fees, a dollar increase in the cigarette tax, and the “casual rental tax” (if you rent your camp to your sister for a month, you have to charge a new seven percent sales tax).

Moreover, there were 21 line items where the state failed to conform to Federal tax cuts. These total more than $185 million. It is state policy to conform to federal tax changes, but the Baldacci administration has decided it’s not convenient to do so.”

Lipstick anyone? (that may or may not be too cute an ending, I debated it).

Alex Hammer is an Independent candidate for Governor residing in Bangor. The campaign’s website is

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