Governor LePage Addresses Mountainf of Taxation Unapproved by Maine Voters.

In mid- February Maine's Governor LePage gave a radio address explaining why he declined to approve bonds promise by quasi governmental agencies These are a few quotes from LePage's Radio Address

 $19,448! If you are one of Maine’s 653,000 tax filers, this is your share of the Maine’s $12.7 billion in public debt. If you do not remember approving nearly $13 billion in bonds, you did not necessarily miss an election. More than 95% of Maine’s debt was never approved by voters as required by our Constitution!

As a voter and taxpayer you have only had a say on about $500 million in general obligation bond questions on the ballot. The remainder of our taxpayer-backed obligations is the result of promises made, but never paid for and decisions made by quasi-governmental authorities you have never heard of.

 ....Most of the remaining obligations backed up by Maine’s taxpayers were issued by boards or authorities you probably have never heard of. The debt was issued without your approval and passed onto other entities who we hope will repay the money.....

....Article IX, Section 14 of Maine’s Constitution is clear. With very rare exceptions, the credit of the state shall not be directly or indirectly loaned without a two-thirds vote of the Legislature and a majority vote of electors.

In an article for The Bangor Daily News, Matt Wickenheiser said:

“AUGUSTA, Maine — A $31 million bond package sponsored by a little-known quasi-state government body has stalled after Gov. Paul LePage’s decision not to approve it.


The decision highlights a fundamental shift in how the executive branch views debt in the state and has implications for agencies that issue bonds to help fund such things as college loans, low-income housing, and hospital and school expansions.


The Maine Health and Higher Educational Facilities Authority, or MHHEFA, is the government entity in the state that educational and health care nonprofit groups must go through under federal law to sell tax-exempt bonds, borrowing money for capital expenditures at low rates of interest.


Maine residents have not been asked to vote on such quasi-governmental agency bonds in the past, but that appears to be changing under the LePage administration.”

The bond issue discussed in the Bangor Daily News article is just the tip of a huge mountain of wheeling and dealing that has created a favored class that benefits and an unfavored class that pays. We will hear many voices trying to make LePage guilty by claiming that it is LePage’s actions which are bad for the economy. Although every one wants to see hospitals built and other worthy causes funded, it is outrageous that there are quasi public companies funding bonds at the taxpayers expense without taxpayer knowledge or consent.

One voice, in the above article, tries to make LePage the guilty party for stopping the funding of a hospital construction project and attempts to belittle LePage's actions with the words  that his reasons are "only a philosophical principle"- yes it is a philosophical principle- a political philosophical principle which is recorded and preserved in the Maine state constitution !. LePage gets credit for referencing the actual Article of the Maine state constitution which the issuing of bonds by quasi public corporations violates.

Over the years, the plethora  the wheeling and dealing by quasi government agencies has been justified by claims that it is for "the social benefit" and indeed some of it is, but what starts as a cause to benefit of the impoverished and struggling classes has been twisted time and time again to benefit the well to do. Such is the case with the recent statewide expansion of the Pine tree Zone, an economic zone which was originally conceived of as an act to benefit areas with low income and high unemployment to become, with the state wide expansion, aggressive corporate welfare, in which the favored private economic sector has tax breaks that non-profit organizations would envy, while avoiding an equal level of transparency as a non-profit organization must maintain by having publicly accessible annual reports.

Once the government starts manipulating, there is no end to it, and what starts out as seemingly reasonable cause is co-opted by the power elite to use for their own ends. This has become a massive practice in Maine, which LePage has only hinted at, but he is the first politician to do that.

Along with the manipulations comes the hidden and expanding expense of a bureaucracy needed to manage the transference of wealth to the chosen ones, whoever they happen to be. Just the bureaucratic expense, alone, wipes out part or all of the alleged benefit to the larger society. There is no way to even keep track of who the real beneficiaries are - given the combination of increased bureaucratic expenses and increased lack of transparency.

The other side of it is that it creates an artificial world in which some businesses and organizations are worthier than others. This is a mechanical and atheistic "philosophy", one in which the ruling elite takes the place of God.

In a state in which one discovers a new government chartered corporation or regulations designed to benefit the favored sector, every week, this is the best news I have heard in a very long time.

Imagine what resources might be suddenly freed up, if we could eliminate all special interest benefits with the swoop of a wand. It would be like the sudden rushing of a frozen river in the early spring.

Defining Terms

As some who might read this may know, the journalist and author, Colin Woodard , is a relative of mine. Colin wrote an article, Brewing Up A Storm, on the Republican Party's new platform for the September 2010 Downeast Magazine. I posed the following comment in repsonse.

Defining Terms


If the term centrist is supposed to mean a point in between the small size of government favored by our founding fathers and those who believe in a larger government providing certain entitlements for the people, then it raises the question why the term ”centrist” applies to the entrenched political system in this state, which has collectively advanced state capitalism over the past fifteen years, including this year’s recent passage of LD1, which unconstitutionally charters a mutual funds investment corporation .LD1 was sponsored by none other than Peter Mills, who is calling those who want to return to the state and federal constitution “far right extremist”. In the creation of investment corporations, through special acts of legislation, the entrenched political system in Maine has passed far beyond “centrism”. It is incredulous that Peter Mills would characterize a state congress that has instituted an expanding state capitalism system over the past fifteen years as “Reagan conservatives”, an identity associated with tax cuts and rolling back government. Expanding capitalistic investment corporations, subsidized by the taxpayer, does not qualify as “rolling back government”- rather it grants state capitalism a competitive edge over the private economy which competes in the same investment market as the government- and in fact underwrites that competitive edge, which special acts have legislation have granted to state-sponsored capitalism.



This articles does not make mention of the fact that the primary thrust of the new Republican platform is to return to the rule of law as written in both the Maine and the United States Constitution. The details that are mentioned here are from a much larger list of articulated details relating to the essential theme of rule of law, which is ultimately based in constitutions. Peter Mill’s characterizing of the tea party movement is itself extremist. Intentionally talking about an alleged element that even Mr. Mills acknowledges is a fringe element, all the while ignoring the main stream of the tea party movement. The intent is obvious. Before Mr. Mills accuses others of not abiding by the “Supreme Court”, he should himself answer the question “How do you reconcile the recently passed LD1 With Article IV, Section 14 of the Maine State Constitution which states “Corporations shall be formed under general laws, and shall not be created through special acts of legislature” ?



This is one former supporter of Snowe and Collins who will no longer vote for these political wild card players. Many felt betrayed when Snowe and Collins handed the stimulus bill to Obama but were ready to reconsider after Snowe and Collins held back on the “too big to read” health care reform bill, but when Collins and Snowe handed over the financial reform bill, which should have been rejected merely on the basis of sheer size and the magnitude of regulations that are added to the magnitude of other regulations in bills previously passed by congress on a “too big to read” basis, it became perfectly clear that Snowe and Collins are unclear in their own minds what the issues are and what side they are on. Forgetting the content of the regulations. The sheer magnitude of regulations are “overwhelming” the private economy, which unlike congress cannot “pass a bill to find out what is in it” but must act on the rational principle of knowing what the thousand upon thousands of new regulations are, before making plans, or hiring more employees.

LD1- A Transference of the Power of Taxation?

Letter submittted to the Boothbay Register
May 2, 2010- I am glad to say that this letter is published in the issue coming out on May 05, 2010.

This article was also published on The Augusta Insider. When The Augusta Insider "merged" with Pine Tree Politics all articles examining state capitalism in Maine were no longer available.

A Call For a People's Veto.
Dear Editor,

I recently submitted a letter, which was also sent to Senator Trahan, who did not respond. This letter concerned the use of taxpayer funding by the Small Enterprise Growth Fund and the proposed LD1 and LD1666. LD 1666 was rejected by the appropriations committee but subsumed into LD1 and then passed unanimously by both the House and the Senate and signed into law by Governor Baldacci.

The Maine Chamber of Commerce describes LD1 as “An Act To Stimulate Capital Investment for Innovative Businesses in Maine”. LD1 is marketed by the Small Enterprise Growth Fund with the following words “This program creates incentives for 20 Million Dollars in the Public Employee Retirement System that have already been targeted for equity investments to be placed in funds that are seeking to invest in innovative Maine businesses.”

I am not a legal expert but such expertise is not required to have general knowledge that when it comes to the law, it is the letter of the law that counts and not external promises or descriptions. When one reads LD1, one will find that in Section 6. Investment goals & guidelines, begins with the words “The purpose of the fund is to invest in a series of high-quality venture capital funds managed to produce a favorable aggregate return among diversified investments, to secure repayment of the amounts borrowed and to minimize the risk of tax credit redemption. Consistent with these investment goals, the board shall give preference to fund managers whose strategies include:

A. Maintaining at least a periodic presence in the State;

B. Actively prospecting for investments in the State;

C. Creating or retaining jobs in the State; and

D. Bringing to fruition the ideas, technologies and intellectual property produced by citizens and institutions of the State. “

The language is vague and suggestive, avoiding specificity and allowing great latitude in interpretation and application. In the phrase “Maintaining at least a periodic presence in the state”, the terms “periodic” and “presence” are left undefined, while the use of the words “at least” permits the “presence” in Maine to be a mere token. The non-existent parameters for retaining jobs in the state can be satisfied by the bureaucratic jobs within the SEGF. As for “bringing to fruition the ideas produced by Maine citizens”, there are no specifics about where and how these ideas will be brought to fruition. Since the current government management of Maine’s economy is invested in technological development and since LD1 Is very arguably a charter for a mutual funds corporation, the language of this bill all too easily enables ideas to be developed in Maine and brought to fruition in countries with low labor costs and minimal environmental restrictions, which produce that “quality” investment in the context of the profit motivation of mutual funds

The bill defines “lender” in such terms as would be otherwise be signified by the term “investor”. The preferred “lender” is The Maine Public Employees Management Fund, which, at first glance, has stricter investing requirements than are written in LD1. If the Maine Public Employees Management Fund declines to invest, “the Fund of Funds” can seek other investors.

In section 9, Audits and Reports, LD1 is suddenly written in very specific terms. Section 9 deals with the relationship between the director of “The Fund of Funds” and the SEGF . Section 9 leaves nothing to interpretation when it specifically defines the length of time that constitutes a period, showing clearly that the writers of this law know how and when to be specific.

One instance in which LD1 is very specific is in Section 7, Investment Restrictions, where the exact words are “The fund may not invest directly in individual businesses but only in venture capital funds…” And yet in promoting this bill it is specifically described as a bill to create funds for “innovative” Maine businesses. Other than a requirement to invest 30,000.00 annually in the Maine Patent Fund, there is no specific wording in this bill that requires more than a token investment in businesses located in Maine.

The SEGF promotes this government chartered mutual fund as a means to take the burden off the Maine taxpayer, when in fact it takes the burden of failure off the SEGF and the individual or institutional investors in ” the Fund of Funds” and places it on the Maine Taxpayer in the form of a “tax credit”, which has no specific relationship to “tax payer”. The “tax credit” is guaranteed by a certificate, for which the letter of the law provides no specific requirements or caps, leaving it solely to the discretion of the SEGF. The tax credit will be used to cover any shortfalls that the Fund of Funds runs up against and is said to be legally binding according to Article One, Section 11 of the Maine State Constitution.

I have to question whether the certificates can be legally binding on the Maine state taxpayer because LD1 states “The board (The SEGF) may raise capital for the fund by offering as security certificates issued by the board.”

The SEGF does not have a government website, which suggest that it is a private corporation which has been enabled by our legislature to advance it’s causes using taxpayer dollars to it’s advantage. Section 9 of the Maine State Constitution- Power of taxation, states “ The Legislature shall never, in any manner, suspend or surrender the power of taxation.” A private corporation cannot make binding agreements for the Maine State taxpayer. By obligating the taxpayer to cover shortfalls within the SEGF with “tax credits”, it is implied that taxes will have to be raised as a means of financing the “tax credits”- as needed.

The language of LD1 is very murky about identifying the authority that is granted power to define the terms of the “certificates” backed up by “tax-credits”. It is the job of the legislature to establish the terms of contract, but in the case of LD1 these terms are left undefined- or worse deferred to the SEGF in the following:

1. Credit allowed. A lender to the Maine Fund of Funds as defined in Title 10, section 396, subsection 5 is allowed a refundable credit against the taxes imposed by this Part in an amount certified by the Small Enterprise Growth Board as established under Title 10, section 384 as equal to the shortfall in scheduled payments on debt incurred to provide capital to the Maine Fund of Funds.

If the authority to define the terms of agreement remains with the legislature, then the legislature has granted itself the authority to negotiate business contracts, which belongs to the executive branch of government. The Maine State Constitution, Article IV, Section 14 states “Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature…” Our legislature seems to believe that it can get around the Maine State Constitution through carefully parsed language and that a corporation by another name is not a corporation.

Based on the LD1 vote, all incumbents should be voted out of office. This Act was passed by “the Rule of the Gavel” where by there is a call for objections and if there are none, all are considered to have voted yes.

Article IV, Section 18 of the Maine State Constitution outlines the process by which the people of Maine can veto bills passed by the legislature. There is a 90-day window of opportunity after the close of the legislative session. In LD1. the taxpayer carries the risk but not does not share in the gain. I have created a Facebook page, “Maine Citizens Against Government Chartered Corporations” to find out if there is enough support among the Maine people to warrant initiating a People’s Veto.

An additional effect of mobilizing a People’s Veto is that it would force government-chartered corporations as an election campaign issue. We know that all incumbents are supporting government chartered investment corporations but thus far, to my knowledge, none of the other candidates for state positions have spoken out on this issue, offering no guarantee that electing a non-incumbent would have any effect on moving back toward a constitutional separation between the state and the capitalistic corporation.

I have written on this subject for the online magazine, The Augusta Insider, under the title, “Socializing the Risk and Privatizing the Gain” This article provides links to the bill and the statute used to authorize it. I hope to encourage an open dialogue about what the actual letter of the law legitimizes and to encourage the citizens of Maine to become more actively involved in reading the bills being passed by our legislature rather than accepting the promotional words about said bills at face value, without further examination or debate. The Maine State constitution needs to be included in that debate.





Sincerely



Susan Mackenzie Andersen

East Boothbay, Maine

Is it Constitutional for the Government of Maine to Manage Maine's Economy?

The Maine State Constitution

Section 14. Corporations, formed under general laws. Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained; and, however formed, they shall forever be subject to the general laws of the State

My Question to ALL political candidates running in state of Maine Elections is how do they reconcile the 1995 legislation that created the Small Enterprise Growth Fund, which to my reading is a partnership between State Capitalism and Private High Growth Capitalism with Section 14 of the Maine State Constitution? Also if this partnership is not a corporation- then what is it? Note that this tax-payer funded "Fund" is a roll-over fund that always rolls over to refinance this investment in "high-growth” capitalism and that the legislation structures it so that "the Fund" reports directly to the legislature- thus by passing the general public- and so not only do the benefits of "the fund" exclude those not qualified as "high growth capitalism" but it is not transparent to the general public- only to the members of the partnership, i.e., government and high growth capitalists
.