Budget Balancing

Posted July 12, 2009, at 5:31 p.m.

Balancing the budget, because it is required by the state Constitution, may not seem like a big deal.

To understand how significant it is that Maine lawmakers closed a nearly $1 billion budget hole without rancor and in a timely manner can only be appreciated by looking at other states.

When the new fiscal year began July 1, a dozen states did not have budgets in place.

Lawmakers in Ohio passed a temporary one-week spending bill while they work on a longer-term budget. Such stop-gap measures also were put in place in Connecticut and North Carolina.

Pennsylvania state workers will receive only partial pay on July 17 and July 24. After that, they will not be paid at all until a budget is passed. Banks and credit unions have agreed to offer low-interest loans and lines of credit to the employees.

In Arizona, campers were asked to leave state campgrounds in anticipation of a state shutdown.

The worst off is California where the Legislature and Gov. Arnold Schwarzenegger are at a stalemate. The governor has refused to sign a budget that raises taxes and lawmakers have refused to cut programs as much as Gov. Schwarzenegger wants. The state, with a budget gap of more than $26 billion, is now operating on IOUs.

Maine, by comparison, ended the year in the black and with a new budget, which also addresses the expected shortfall in 2011.

This was only possible because both Democrats and Republicans worked together, along with Gov. John Baldacci, to pass a spending plan that, while it includes fee increases and use of the state’s Rainy Day Fund, cut state expenditures. The final $5.8 billion budget for 2010-11 is $500 million smaller than the previous two-year budget. It was the first time in 30 years that state spending decreased. If spending had kept pace with average increases in recent years, the budget would have totaled nearly $6.8 billion.

Passage of this budget required some lawmakers, many of them Democrats, to accept larger cuts in services than they would have liked. At the same time, others, many of them Republicans, accepted fee increases and short-term fixes.

Such compromises will also be necessary as the Appropriations Committee meets this summer to look for ways to cut another $30 million from the state budget. That figure was included in the budget for 2011, meaning the cuts must be real. Given the continued economic downturn, the committee has wisely decided to look for even more savings. This is especially true since federal stimulus funding will end then. Local governments should also keep this in mind as some cuts in state funding in the current budget, especially for education, were lessened by the federal funds.

After lawmakers passed the budget, they took the more highly unusual step of passing tax reform legislation, which will lower income taxes for most Maine families. The Tax Foundation, which has long criticized Maine’s high tax rate said “the reform effort is a positive step forward.” The conservative Wall Street Journal called it the “Maine Miracle.”

Passing a budget by a two-thirds majority may not be miraculous, but it is worth appreciating.

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