DOT may face even deeper cuts

Posted Nov. 23, 2008, at 9:24 p.m.

AUGUSTA, Maine — The Department of Transportation is facing three years of reduced revenues, and lawmakers believe they will have to make cuts deeper than outlined by Commissioner David Cole.

“I think we may have to go further in cuts than the department has outlined, and we may have to do it sooner,” Sen. Dennis Damon, D-Trenton, co-chairman of the Legislature’s Transportation Committee, said in an interview. “We are looking at higher costs and less in revenues. It’s not a pretty picture.”

He said the new committee will need to adjust the DOT budget for this year, and it may want to go further and faster than DOT has proposed to Gov. John Baldacci.

Cole outlined a plan to reduce spending by $39 million in the two-year budget cycle that will meet the governor’s target of a 10 percent reduction in base spending. Under the proposal, DOT would eliminate 147 positions, of which 103 are vacant and 44 are filled jobs.

“We would meet the shortfall this year by keeping positions vacant,” Cole said in an interview. But, he acknowledged, that is only if revenues do not decrease further.

The Revenue Forecasting Committee, meeting last Friday, reprojected Highway Fund revenues down by $8.4 million for this year. While most of that, $4.4 million, was in fuel taxes, the panel also projected motor vehicle registration fees would drop by more than 15 percent, a loss of $3.1 million.

Because of the increase in the fuel taxes every year because of indexing, the panel is expecting those tax revenues to slightly improve over the next two years. They expect about a $1 million decrease over the two years.

Overall, mostly because of a continued decline in motor vehicle registration fees, they expect revenues to decrease by about $11 million over the two-year budget.

The committee also discussed meeting in February instead of waiting for the planned spring meeting to reassess revenues because of the volatility in the economy.

“I don’t think anyone thinks we are going to get a rebound in the next few months,” said Rep. Doug Thomas, R-Ripley, a member of the Transportation Committee. “I know people don’t want to hear it, but I think we need to look at more layoffs and do them sooner than next July.”

Mike Allen, research director for Maine Revenue Services, told members of the forecasting committee Friday that fuel taxes continue to lag, even as gasoline prices have dropped. He believes Mainers are looking at the uncertainty in the economy and limiting their travel and discretionary spending.

“I don’t think we will see that change anytime soon,” he said.

Thomas is a sharp critic of DOT administration and believes there are more administrative positions that can be cut and that the money saved can be used for road and bridge repair and replacement.

“We need to use the money we have for roads, not bureaucrats,” he said.

Cole defends his agency’s administrative costs and said the DOT has “a lot fewer” workers than it did two years ago.

“We will have even fewer if our proposals are accepted,” he said.

But even Democrats on the panel believe DOT will have to cut further. The “base” budget of the agency is determined by current law that will require the state’s General Fund to pick up a significantly larger portion of the cost of the state police. Under the law, the Highway Fund share of state police drops from 61 percent to 49 percent.

“It seems that that’s one of the assumptions, that whole shifting, which this committee is going to have to be very careful about depending on,” said Sen. Bill Diamond, D-Windham, a member of the panel. “My sense is the General Fund will be looking to find any way they can to meet their budget needs.”

He and several other panel members doubt that with the state’s General Fund revenues down $140 million this year and projected to be below estimates by $331 million for the two-year budget cycle, the current law setting state police funding will stand.

“There are going to be a lot of demands competing with the needs of our transportation infrastructure,” Damon said.

He expressed hope that Congress will act on proposals in the new session to help the states with infrastructure needs. He said it is clear Maine will fall further behind in needed bridge and road repairs with slumping revenues.

Efforts to pass such help have stalled in this Congress. Democratic 2nd District Rep. Mike Michaud, a member of the House Transportation Committee, believes that the House would support a $25 billion plan his committee supported in September, but that it will not pass the Senate until the new Congress takes office.

Maine’s Republican senators support an infrastructure package with Susan Collins proposing a $50 billion package. Collins said construction jobs are a key to helping the economy recover from the recession, but agreed passage by this Congress is unlikely.

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