AUGUSTA -- Gov. John Baldacci sat down with Kennebec Journal Statehouse Reporter Susan Cover recently to talk about a range of topics, from the proposed $700 billion Wall Street bailout, to the state budget and his political future.

Baldacci, a Democrat whose term ends in January 2011, also provided insight as to what he'd like to accomplish before he leaves office.

Here are the questions and answers, edited for length.

KJ: What do you think of the president's $700 billion bailout package?

Baldacci: I think the package he originally put forward was too open ended. There were powers and duties given to the secretary of the treasury that were more than what they gave the secretary of defense in the Iraq War. There's just enormous, unaccounted freewheeling, no checks and balances.

I was pleased that they are open to the changes that are being proposed. I think the package is becoming a lot more bipartisan. There's going to be caps on CEOs and they are going to investigate to determine the wrongdoing and start to hold people accountable to make sure they know in the future there's going to be someone watching what they are doing.

This is an enormous amount of financing but there are no alternatives, our economy is at risk.

KJ: Should Mainers be worried about their 401(k)s, their homes, their jobs?

Baldacci: I think they should be concerned about them. I think the best thing for Mainers is to give their financial adviser a call, whoever is managing their money. It's almost the same advice as getting ready to do energy weatherization. It really does pay to have somebody who understands the business, so whatever you do will be more effective.

KJ: Will you propose legislation in January to address any of these kinds of financial issues, or are they primarily a federal issue?

Baldacci: We passed a bill to protect Maine citizens against subprime lending before any other state had. Our legislation became a national model.

I've been talking to financial institutions in Maine and our commercial banking sector. Because it is pretty well regulated, there's capital and asset requirements, they really have not got caught up in this. Some may have had an investment here and there, but they have not to a large degree, got caught up in this.

I've spoken to most of the major of banks in Maine. You always want to know, OK, this is happening nationally, what's the impact in Maine.

Because of the ripple impacts of the economy, and because Maine is part of the national economy, we've seen a slowdown in our sales and use tax and in other businesses. While we're holding our own, it's not as much growth as we've seen in the past because of what happened nationally.

KJ: It is clear you and your staff are going to have to make some tough budget decisions. What are your priorities for funding and what won't you be able to pay for?

Baldacci: It's clear to me, while some people fought us on consolidation of administration in school districts, county jails, natural resource agencies, people didn't want to do it. People thought it was too much.

Well, not only was that the right thing to do, we should have been doing more. So you're going to get more of it in the next budget.

Our goal really ought to be to recognize that we can do more efficient administration over a wider area, not just in school administrative districts and municipal government, but in county government and state government.

The work force issues, where the private sector is going to need more workers in the future, and the workers in our state are going to be older, it's going to be important to make sure there's not a strain from future government employment. We're going to gradually trim the ranks in government administration and be able to free up more private sector employment and see there's a better balance there.

KJ: You've also talked about (reducing) the income tax. Who will be helped initially, and were do we go from there?

Baldacci: What I'm looking at is helping people who are working and earning income to keep more of their own income. One way I'd like to look at it, but I'm open to the Legislature, I'm going to provide a pool of resources to begin the process to provide income tax cuts. Whether it's at the first dollars that are earned that become tax exempt, or they rejigger the rate schedules, whatever they do, that's something I would want to do with the Legislature.

My goal is to begin to come up with the money so we have the opportunity to be able to do that. This budget is going to be tough. As austere as these times are, I think we've got to begin to get to where we need to in terms of our tax burden. We're very close to getting to the national average, and this has been a big deal to Maine for a long time.

KJ: You've got just over two years left in your term. What are the three things you'd really like to accomplish between now and when you leave office in January 2011?

Baldacci: I think reforming government, transforming state government, reducing the tax burden on working families and small businesses, and very aggressive economic development tools such as Pine Tree Zones expanded statewide, so that we're having business opportunities anywhere in the state.

We need to be known as a state of opportunity, not just Vacationland, but Opportunityland. I think you're seeing Maine recognized for retirement, you're seeing Maine recognized for quality of life, you're seeing more families coming into Maine and if we can work on balancing the tax burden, along with raising incomes, and protecting quality of life, you're going to have more and more people making Maine their home base.

Broadband Internet, huge opportunities with wind, solar, tidal. We've got a huge opportunity in that whole field.

KJ: Rumor has it you might be thinking of running for Sen. (Olympia) Snowe's U.S. Senate seat in 2012. Any truth to that?

Baldacci: Right now, I love Maine. I was in Washington for eight years. I loved and was honored by the work I did in Washington, but my heart is here.

My wife and I bought a place in Holden and we're gradually getting ready to move on, get Jack (their teenage son) in college, trying to encourage my wife to look at kindergarten teaching. There's an easy chair out there that has my name all over it.

In terms of any other politics, I've told people I'm not running again. There's enough challenges right here in Maine.

Susan Cover -- 621-5642

scover@centralmaine.com