Faced with a $438 million shortfall in state revenues at a time of high unemployment and high economic anxiety, lawmakers must reduce government spending, but they must do it in a way that doesn’t exacerbate underlying economic problems. The governor’s proposed supplemental budget, which emphasizes making government more efficient in addition to cutting funding to government entities and some one-time fixes to plug the revenue hole, seeks to strike that balance.
“Every dollar possible should be directed toward providing services to the people of Maine,” Gov. John Baldacci said in releasing his budget revisions Friday.
This is what should guide lawmakers as they consider the governor’s, and others’, proposals to close the budget gap. Some administration is necessary for any program, but minimizing that administration so that limited resources can go toward providing services simply makes sense.
Like other states, Maine continues to see revenues — mostly tax collections — well below what had been anticipated. Forty-eight states have dealt with shortfalls, totaling $193 billion, in their budgets for fiscal year 2010.
The Maine Legislature earlier this year passed a budget for 2010 and 2011 that was $500 million smaller than the previous biennial budget — the first such decrease in more than three decades.
Even with that reduction, the state faces a $209 million projected shortfall in 2010 and a $174 million gap in 2011.
The revenue shortfalls are expected to last beyond 2011, so continuing to downsize government now is as much about closing a current funding gap as aligning state and local government with available resources.
“We must reduce state spending, but government still has a responsibility to its people,” Gov. Baldacci said Friday. “While we are making significant cuts, we are also working to mitigate them by giving local governments and schools the tools to lower costs.”
Consolidating school administration, sharing of municipal services, merging county jails and state correctional facilities and providing uniform special education guidelines are examples of those tools.
Many of the cuts were included in a curtailment order the governor issued last month. Because they are the largest shares of state spending, general purpose aid to education and the Department of Health and Human Services would see large reductions in funding under the governor’s budget proposal. Reducing payments to providers who participate in MaineCare and reducing services for the program’s participants — who are poor, elderly and disabled — will be contentious.
What shouldn’t be is a proposal to merge state natural resource agencies and to reduce bureaucracy in other agencies.
Lawmakers must ensure that costs are not simply passed down to municipal governments through cuts in revenue sharing and a shrinking of the tax relief Circuit Breaker program, as the governor has proposed.
Some will complain that the state work force — which has been reduced by about 6 percent since 2002 — should be further shrunk. At a time of high unemployment and high demand for government services, this could be counterproductive.
Likewise, a tax increase would help fill the funding gap but would not move the state toward a smaller, more efficient government and would add to the financial stress already borne by Maine families during this extended economic downturn.
The governor has proposed a reasonable approach for dealing with an unprecedented economic downturn. The test for alternatives is that they devote scarce dollars to services rather than bureaucracy.