Budget Clock Ticking …

Posted Nov. 21, 2008, at 7:15 p.m.
Last modified March 20, 2011, at 3:28 a.m.

Looking through the long list of cuts ordered this week by Gov. John Baldacci, it is easy to see the great difficulty that will plague lawmakers when they reconvene next month. Their challenge is to decide where to reduce state spending while doing the least to harm essential state services and programs. They must do this quickly — the longer they wait before passing a supplemental budget the less time they’ll have to make the cuts.

The governor set the right tone by focusing first on areas with the least potential to harm. Making do without filling vacant positions and putting off the purchase of new uniforms, for example, is inconvenient but a better choice than eliminating or decreasing needed services. These comparatively easy cuts, however, will not be nearly enough to fully close the budget gap facing the state for the remainder of this budget cycle, which ends in June, or to patch the larger hole predicted for the next biennial budget.

Meeting yesterday, the state’s Revenue Forecasting Committee said the revenue downturn in Maine, resulting largely from the slowdown in the national economy, is expected to be worse than predicted. The gap between revenues and state expenditures is expected to be about $150 million for the remainder of the fiscal year 2009, which ends June 30. The shortfall for the next two years is predicted to be $330 million.

The governor’s curtailment order, issued Wednesday, directs state agencies to cut $80 million. Because the Department of Health and Human Services and state funding of local schools are by far the largest share of the state budget, the curtailment was especially hard. DHHS spending would be cut by $30 million and school funding by nearly $28 million.

The order remains in effect until lawmakers pass a supplemental budget, which should prompt lawmakers to take a hard, but quick, look for alternatives.

There is additional urgency to the need to pass a supplemental budget. The Maine Constitution requires that the state balance its budget. Because of lower than expected revenues, spending must be reduced. To become effective immediately, two-thirds of the Legislature must approve a supplemental budget. The sooner a budget is passed, the more time is available to absorb the cuts. If lawmakers approve a budget in January, for example, there will be nearly six months to reduce state staffing and cut spending in specific programs. If a budget is not passed, say, until March, there will be only three months to absorb the cuts. This means that if a department proposed to lay off 20 people in January to reduce its expenses, it may have to lay off 40 or more in March; if a department proposed to cut $50,000 in spending per month beginning in January, it would have to cut $100,000 if the cuts don’t begin until March.

So, while legislative leaders are right to talk of the need to minimize the harm caused by the cuts and to look for alternative ways to reduce spending, ideological and partisan positioning cannot slow the process.

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