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LePage close to ordering $35.5M spending curtailment to balance budget

Gabor Degre | BDN
Gabor Degre | BDN
Gov. Paul LePage in Rockland on Saturday, March 3, 2012.
By Matthew Stone, BDN Staff

AUGUSTA, Maine — Gov. Paul LePage is close to issuing a spending curtailment order that requires state agencies make $35.5 million in immediate cuts to keep the current year’s budget in balance amid a diminished revenue picture.

LePage spokeswoman Adrienne Bennett said late Wednesday the administration is making final details for a curtailment order, and said she expected the governor to issue it Thursday. The order had been expected as early as Wednesday.

“The governor’s analyzing the impacts on various programs,” Bennett said. “He’s making sure he understands the full details and the full impact.”

LePage was in meetings throughout much of the day to work out the specifics of the curtailment order, Bennett said.

“He wants to ensure it’s done in a meaningful way, that it’s not across-the-board cuts,” she said. “Every choice is difficult.”

The $35.5 million curtailment is a temporary measure to keep the budget in balance as state revenue collections slip. State law requires that the cuts be made as equitably as possible across state agencies and programs. The reductions remain in effect until lawmakers take action.

Curtailment has been a likelihood for nearly a month, since the state’s Revenue Forecasting Committee revised its tax revenue projections downward for the current budget year by $35.5 million. The downward projections were the result of sales and income tax collections — both corporate and individual — that have come in below estimates for the year.

Finance Commissioner Sawin Millett formally recommended at the start of December that LePage order a curtailment. Since then, LePage and others in the administration have met with state agency heads to determine where to make cuts.

The pending curtailment order sets the stage for a busy budget season when lawmakers arrive in Augusta for the Jan. 8 start of the legislative session.

The LePage administration is expected soon to propose a supplemental budget package to keep the current budget — which remains in effect through June 30, 2013 — in balance. In addition to lower revenue projections, that task is complicated by a $100 million shortfall in the state’s Medicaid program that the LePage administration attributes to an increase in the use of Medicaid services and the state’s inability to make about $20 million in Medicaid cuts that federal officials have yet to approve.

Legislative leaders have said they plan to convene the Legislature’s budget-writing Appropriations Committee as soon as they have a budget proposal in hand.

In addition to a supplemental budget package, the administration is set to unveil its proposal on Jan. 11 for a new two-year budget, which would take effect July 1, 2013.

In addition to projecting shortfalls this year, the Revenue Forecasting Committee estimated that revenues for the two years covered by the next state budget would fall $125.2 million short of previous forecasts, inflating the state’s structural budget gap estimate to $880 million for the next two-year budget cycle.

The structural gap is the amount by which expenditures would exceed revenues if state spending continues essentially at the same level, if the state meets all its spending commitments and if actual revenues don’t stray from projections.

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