As important as the details of the governor’s supplemental budget is the bipartisan, cooperative spirit that met the proposal to cut jobs and reduce spending to address a $140 million shortfall in the current budget. Finding common ground will be key to quickly passing a revised spending plan for the remainder of this fiscal year and, more important, for writing the budget for the next two years.
On Tuesday, Gov. John Baldacci unveiled his plan to balance the budget. It relies heavily on the elimination of state jobs, especially in the Department of Corrections, and using money from the state’s reserve accounts, often called the Rainy Day Fund. It does not raise taxes, fees or fines.
The cuts and changes come on top of a November order from the governor to cut spending by $80 million. Those cuts targeted the Department of Human Services and state support of K-12 education, the largest recipients of state money.
“Everyone is being asked to get along with less money, even in places where there is significant need,” the governor said in announcing his budget plan.
“The plan I am presenting is responsible, balanced and tough,” he added later.
The Republican leadership in Augusta echoed his comments. “At first blush, the package described by the governor today sounds generally reasonable and balanced,” Senate Republican Leader Kevin Raye and House Republican Leader Josh Tardy said in a joint statement.
“The Legislature now has a responsibility to carefully scrutinize each component in detail before passing judgment,” they said.
Although they cheered the governor’s avoidance of tax increases, they raised concerns about the governor’s plan to reduce state payments to hospitals and hospital-based physicians. To improve the stability of several hospitals in rural areas, they were designated as critical-access facilities and re-ceived higher payments from the Medicare and Medicaid system, which includes federal and state payments. These facilities are paid 117 percent of their costs. Gov. Baldacci proposes to drop that to 101 percent. Since these facilities have higher profit margins than other hospitals in Maine, this is a reasonable change given the financial constraints the state is under.
Republicans are right in principle that the state should repay the money it owes hospitals to settle a years-long underpayment problem. Again, however, repaying profitable institutions may have to wait when cutting programs people rely on for everyday living would be necessary to come up with that money.
These are the difficult choices lawmakers will face as they consider ways to close the $140 million shortfall in this budget and, more so, the $838 million gap in the 2010-11 budget.
Lawmakers must also realize that the time for analysis and debate — important aspects of the process — is limited. Because state spending must be reduced by June 30 to match the downturn in revenues, the sooner a supplemental budget is passed, the quicker the cuts can take effect. Cutting more than $70 million in six months is less painful than cutting the same amount in three months.
The situation was best described by Senate President Elizabeth Mitchell: “This difficult economic climate presents us with no good choices.”
Working quickly together to make the best of those choices is the only way forward.