Finance chief warns of state spending cuts

Posted Oct. 16, 2008, at 10:06 p.m.

AUGUSTA, Maine — Anticipating major state spending cuts, the Baldacci administration’s finance chief on Thursday briefed legislative budget writers on gubernatorial planning in the face of a declining economy in Maine.

Commissioner Ryan Low of the Department of Administrative and Financial Services addressed the Appropriations Committee only briefly on the subject of a possible curtailment of state appropriations — an executive step to rein in spending — and offered no specifics or new details.

“What we didn’t want to do was wait” on developing contingency plans, Low said, adding that state agencies were in the process of filing cutback options.

Last week, Gov. John Baldacci began setting the stage for spending reductions and ordered immediate 10 percent cuts in his own office.

Also addressing the Appropriations Committee on Thursday was the head of the state’s Consensus Economic Forecasting Commission, Charles Colgan, who told lawmakers the panel was reducing its projections for job growth and personal income growth for 2009 and 2010.

Colgan said Maine is likely to experience recessionary conditions worse than those of 2001 but not as bad as in 1990-1991.

He also cautioned about economic uncertainty at the national and global levels.

“Trying to do forecasts in the current circumstances is really extremely difficult,” Colgan said.

A separate committee is scheduled to use the commission projections to help update the state revenue forecast before the end of the year.

Curtailment orders are temporary and serve to reduce the rate of spending until the state budget can be rewritten to reflect expected revenue shortfalls.

In September, Baldacci directed state agencies and departments to make contingency plans for a possible 10 percent reduction in their budgets for fiscal 2010-11, which will take effect July 1, 2009.

Last December, the governor issued a $38 million curtailment order, with the bulk of the cuts applying to human services and education programs.

The Legislature in April enacted a state budget rewrite that offset a $190 million shortfall in the $6.3 billion two-year budget.

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