Austere budget to test lawmakers’ endurance

Posted July 21, 2009, at 11:34 p.m.

AUGUSTA, Maine — Legislative budget writers will gather in Augusta today and Thursday to resume their efforts to find tens of millions of dollars in savings in an already austere budget.

A report released this week, meanwhile, highlights the challenges facing Maine and other states. While states closed shortfalls totaling $142.6 billion for fiscal year 2010, deeper cuts will likely be required due to the typically slow turnaround in state revenues after recessions.

“This all underscores an unfortunate fact: Without a doubt, lawmakers’ endurance to resolve extraordinary fiscal problems will be tested for years to come,” warned the authors of the report by the National Conference of State Legislatures.

Members of the Maine Legislature’s Appropriations and Financial Affairs Committee were initially charged with identifying $30 million in savings in fiscal year 2011, which begins next July.

But that gap may have grown to about $80 million — or larger — because tax revenues for the fiscal year that ended on June 30 were even smaller than projected. That means legislative budget writers who trimmed more than $1 billion from the current biennial budget will have to look for even more areas to cut.

“There isn’t much left,” remarked Rep. John Martin, D-Eagle Lake.

The 2010-11 budget contains cuts to public schools and colleges, health and human services programs and 20 government shutdown days during which state employees will not receive a paycheck.

The result was a spending blueprint $500 million smaller than the previous biennial budget.

Martin said the Legislature faces tough restrictions on where else it can cut. For instance, federal law prevents the state from cutting too deeply into the benefit packages for MaineCare, the state’s Medicaid program.

Several state agencies and programs, such as the Department of Inland Fisheries and Wildlife, are already largely self-funded. And public safety programs, such as the Maine State Police and Marine Patrol, are already struggling to meet their obligations.

That means the Legislature will have to take a hard look at the sizable chunk of the state budget that goes to towns, counties and school districts, Martin said.

“It’s not going to be a pleasant task,” he said.

Rep. Sawin Millett, R-Waterford, said state aid to local governments and schools has to be on the table, just like anything else. But Millett said lawmakers will have to look at scaling back some of the optional services that go beyond Medicaid requirements as well as other services offered by the state.

Millett, the ranking minority member on Appropriations, agreed with committee co-chairman Sen. Bill Diamond, D-Windham, that this time entire programs may fall to the budget ax.

“I think we have no choice but to look at entire programs and to do some real prioritization,” he said.

The committee will receive presentations throughout the day today and Thursday from various state officials. The committee is scheduled to meet at 9 a.m. on both days.

Similar conversations are taking place nationwide as most states adjust to the ongoing recession.

California’s budget crisis has understandably received the most national attention. That state’s current budget shortfall of $26 billion is roughly 4½ times the size of the $5.8 billion budget to operate Maine state government for the next two years.

But nationwide, state legislative bodies have already slashed $142.6 billion from their budgets for fiscal year 2010, according to the report from the National Conference of State Legislatures. That is up from $113 billion in fiscal year 2009.

Twenty-five of 35 states that contributed data to the report, including Maine, said they tapped into federal stimulus money to offset the budget shortfalls.

The NCSL report says that at least 11 states raised taxes in response to dwindling revenue flows. In New York state, for example, tax increases accounted for more than 39 percent of the gap-closing revenue.

The Maine Legislature’s Democratic leadership and Gov. John Baldacci point out that they cut spending without increasing taxes. In fact, they claim the tax restructuring plan that will take effect this September will result in the vast majority of Mainers paying fewer total taxes and tourists paying more.

Eight states tapped into their “rainy day” funds to close budget shortfalls. Maine used $116 million from its reserve accounts.

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