State workers to benefit from budget package that cuts $438M

Posted Feb. 10, 2010, at 10:30 p.m.

AUGUSTA, Maine — State workers are the beneficiaries of the first changes proposed by Gov. John Baldacci to his $438 million budget cutting package. Further proposals, he said, will be deferred until Congress acts on additional stimulus funds and the state revenue forecasting committee acts on the improving revenue picture.

“We will be submitting further changes when we are sure what additional resources we will have to use,” Baldacci said Wednesday. “We want to be able to mitigate, but we will not be able to eliminate the cuts.”

He said the biggest savings in the first change package came through negotiations with state worker unions that wanted to avoid the three additional shutdown days Baldacci had proposed in the supplemental budget.

To avoid that shutdown — which would have been in addition to the 20 shutdown days already included in the two-year budget — the governor’s proposal includes a “payroll push.”

Essentially, by delaying state workers payroll by three days — and thus pushing it into the next fiscal year — the state will generate one-time net savings to the general fund of $8.2 million. The delay also will result in net savings to the Highway Fund, from which state highway workers are paid, of $3.6 million.

“This few-days delay in payroll will allow us to book some significant savings,” Finance Commissioner Ryan Low told the Legislature’s Appropriations Committee.

Sen. Bill Diamond, D-Windham, the co-chair of the committee, said payroll push — and any more stimulus money anticipated by the state — would not make much of a dent in the $438 million in proposed cuts under consideration by his committee.

Sen. Richard Rosen, R-Bucksport, said budget gimmicks — like the payroll push — will be a hard sell with some Republicans. He said too much of the state budget “fix” is coming from one-time sources, and not ongoing savings.

The largest unknown for additional state revenues is possible additional federal aid.

The governor’s budget has a $35 million placeholder amount, but Congress has not acted. Continuing the current “enhanced” Medicaid match rate for six months, a proposal before Congress would generate about $95 million for the state in the second year of the budget.

The state revenue forecasting committee is expected to re-project revenue at the end of the month, but no estimates have been released based on the slightly improved economic picture from the state Consensus Economic Forecast Commission.

“It certainly is not going to be a lot of money,” Low said.

But, revenues are above estimates for the first two months since they were reprojected down in November. In January, preliminary figures indicate revenues were $13.5 million above estimates bringing the two-month total to $46 million.

Rep. Emily Cain, D-Orono, the House co-chair of the committee, said while the panel expects some additional revenue, she is worried some lawmakers believe there may be enough to solve the state’s budget crisis.

“This should be a help, but it will not solve our budget problems,” she said. “We are going to have to make some cuts that I don’t think anyone wants to make.”

Rosen said the increased revenues are nearly all from increased income taxes, both individual and corporate. He is worried that the sales tax has not met its lowered expectations in either month.

“People are trying to save more, and trying hard to pay down their debt and as a result, purchases are very sluggish,” he said. “And I think that is a trend that is going to continue for some time.”

Diamond said with all of the uncertainty about how much “new” revenue sources would be available to address the budget shortfall; the panel will have increasing difficulty in taking votes on budget proposals.

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