Economic Realities

Posted Oct. 13, 2008, at 7:24 p.m.

As difficult as it was to shrink the state budget earlier this year, lawmakers will face an even more difficult task next year. Already facing a $500 million gap between state revenues and expenditures over the next two years, the current economic downturn is likely only to widen that gap.

“We’re not officially in a recession, but it certainly feels like it,” Gov. John Baldacci said in a recent radio address.

As a result, he’s asked every state department to submit documents showing where they would cut 10 percent. He’s already made the cuts in his office. This doesn’t mean that the administration will cut spending 10 percent across the board, which would be a very blunt way to deal with a complex, but long foreseen problem.

Instead, this exercise should be the beginning of a conversation that has gone on in fits and starts in Augusta for years but never came to serious conclusions, and which will dominate the next legislative session.

The result must be to prioritize state spending. This work of evaluating programs and services — within and across departments — is long overdue and will lead to important discussions about what programs and services the state can realistically provide with the funds it has. Through this work, lawmakers should decide what work is truly essential and what is important but can’t be paid for with the state’s increasingly limited resources. Some programs and services will be pared back. Some, and the employees who provide them, will be eliminated.

Earlier this year, lawmakers were able to close a $200 million gap in the current budget by cutting programs and raising some fees. The task is more difficult now, because any cuts in programs and services will come on top of those made in the spring.

This highlights the need to re-double efforts to consolidate government and public services at all levels. A plan to consolidate state and county corrections operations has been slowed down and school administration consolidation remains controversial, although most districts are moving ahead with plans to work with their neighbors.

A report released earlier this year by the State Planning Office showed the results of LD 1, the citizen referendum requiring the state to pay 55 percent of local education costs to reduce the tax burden. The measure also set spending limits for state, municipal and county governments.

According to the report, the state and the majority of municipalities and counties were under their limits, but 82 percent of school units exceeded their caps by a total of $132 million, money borne by taxpayers. The percentage of school units exceeding the caps has increased each year since LD 1 went into effect.

Lawmakers must take a closer look at this situation.

Although addressing spending is the first priority, a tax increase should be part of the discussion. Lawmakers may decide that some state services are so necessary that raising taxes to pay for them may be appropriate.

Maine’s, and the nation’s, economic situation means that difficult and unpopular decisions will have to be made. Those decisions must be made after close scrutiny of all state spending and with the expectation that the lowest spending priorities are likely to be cut.

http://bangordailynews.com/2008/10/13/opinion/economic-realities/ printed on October 25, 2014