Lawmakers worry $35.5 million in state budget cuts will just send costs elsewhere

By Matthew Stone, BDN Staff
Posted Jan. 04, 2013, at 6:17 p.m.

AUGUSTA, Maine — Lawmakers on the Legislature’s newly seated Appropriations Committee had their first public look Friday at Gov. Paul LePage’s recent order for state agencies to make $35.5 million in immediate cuts and pressed the governor’s finance commissioner for more details.

The budget-writing panel’s first meeting came about a week after LePage issued the curtailment order, which puts into motion $13.4 million in cuts to health and human services programs and nearly $12.6 million in reductions to local school aid. The curtailment order is designed to keep the current state budget in balance amid flagging state revenue collections.

The LePage administration booked many of the savings through positions that have been vacant since the start of the current budget year and by asking agencies to, in some cases, put off hiring plans. The Department of Corrections, for example, booked nearly $2 million in savings through reduced personnel costs.

By converting to a schedule of 12-hour shifts for corrections officers, “they’ve reduced the amount of overtime,” Finance Commissioner Sawin Millett said. “They’ve actually been achieving salary savings that had been quite unheard of in previous years.”

In some cases, the curtailment-related cuts will have a direct impact on services. The $13.4 million in cuts to the Department of Health and Human Services budget, for example, include $2.2 million in funding reductions to state contracts with providers that serve people with substance abuse problems and mental illness.

Guy Cousins, director of mental health and substance abuse services at DHHS, told the Bangor Daily News last week that the curtailment will cut about 5 percent of state contract funds to service providers that they haven’t yet received for the current budget year, which ends June 30.

“I guess I’m concerned about a lot of cost shifting going on,” said Rep. Linda Sanborn, D-Gorham. “We know a lot of people will end up in the emergency room, and I don’t know if you’ve thought about some of the other unintended consequences or where the other cost shifts will come.”

Bonnie Smith, DHHS’ deputy commissioner for programs, told lawmakers that department officials were limited in what cuts they could make. In the areas they did make cuts, Smith said, DHHS officials tried only to make reductions in areas for which similar support services are available through other funding sources, such as the federal government or other state programs.

“There was an effort to see that there was some maintenance of that safety net,” she said.

The department also looked to areas in the department where spending has traditionally come in under budget, Smith said.

“Those that have lower spending than anticipated, those that have a history of not spending their full allotment, those were our first areas of approach,” she told Appropriations Committee members.

While the bulk of lawmakers’ questions involved health and human services cuts, Rep. Michael Carey, D-Lewiston, asked why the $12.6 million in cuts to local school aid didn’t specifically target payments from school districts to the state’s two charter schools that opened their doors in the fall. School districts pay a per-student amount for each resident student who enrolls in a charter school.

“What was the policy decision made to kind of hold those students harmless from this cut?” Carey asked.

“Ultimately, I believe we felt like the payment schedule that’s associated with those students coming and going has been confusing enough,” said Deputy Education Commissioner Jim Rier, who noted that about 100 students statewide are enrolled in the two charter schools.

While many of the cuts included in the $35.5 million curtailment package take effect immediately, they don’t become permanent until the Legislature acts on them. With local school aid, the Department of Education won’t start reducing school systems’ subsidy checks until lawmakers sign off on the reductions.

“It’s important that school systems know early because such things as layoffs of staff, in most cases, there’s got to be a 90-day notification,” Rier said. “If they wait, sometimes it will be so late, they won’t accomplish any savings.”

In addition to the curtailment, Appropriations Committee members on Friday also started to discuss a supplemental budget package the LePage administration plans to unveil next week that will address the $35.5 million revenue shortfall as well as a $100 million budget gap in the state’s Medicaid program.

The administration next week is expected to unveil its proposal for the next two-year state budget, which takes effect July 1. That budget also will be complicated by a diminished revenue picture: Recent estimates project that tax revenues will fall $125.2 million short of earlier forecasts during the two-year cycle, growing the projected structural budget gap for the period to $880 million.

http://bangordailynews.com/2013/01/04/politics/lawmakers-worry-about-impact-of-35-5m-curtailment/ printed on July 12, 2014