AUGUSTA, Maine — Citing economic hardships amid “unprecedented times,” Gov. John Baldacci on Friday outlined his plan to close a $438 million state budget gap that includes deep cuts to education and human services programs but no new taxes or fees.
The governor’s plan, forced mostly by lower-than-expected revenues amid the recession, further decreases the two-year budget to $5.5 billion. It is the first budget in three decades that’s smaller than the one preceding it, Baldacci said.
“During these unprecedented times, we must balance the state budget at the same time that the recession is placing increased demands upon government to take care of people and families in need,” Baldacci said.
While the budget-reduction plan cuts across state government, it calls for some of the deepest reductions in two of the state’s largest departments: Education, which would lose $73 million; and Health and Human Services, which would lose $68 million. It also reserves space for an expected $35 million increase in federal funding for Medicaid, but does not propose tax increases, new fines or fees.
The budget plan, which the Legislature will review next month, also adds three state government shutdown days to the 20 already approved for the two-year period. It also establishes a new tax collection program to recover old debt to the state and makes a number of structural changes to consolidate state agencies.
“We’re definitely taking a kick,” said Steve Butterfield, executive director of the Maine State Employees Association, which represents more than 10,000 state workers. Butterfield warned of a ripple effect through the economy when, because of state job reductions, needy people receive fewer state services and highways and bridges go without proper maintenance.
Baldacci’s proposal also includes cutting funding for higher education by $16 million as well as reducing rates paid for certain Medicaid and MaineCare health services. A large chunk of the budget shortfall, nearly $70 million, would be offset by what the administration identified as surplus from the state employees health insur-ance savings program.
Influential legislators from both parties praised the Democratic governor for avoiding tax increases but said some portions of his proposal are sure to face tough questions.
Democratic Sen. Bill Diamond, of Windham, chairman of the Appropriations Committee, said the nearly $70 million in human services rollbacks will likely spark opposition from program recipients.
Senate Republican Leader Kevin Raye, of Perry, said he’s concerned about the impact of some of the cuts on municipalities, which could in turn raise local property taxes.
“We are going to take a hard look at those things that are one time in nature,” he said, “We don’t simply want to push all the problems off to the next governor and the next Legislature.”
Finance Commissioner Ryan Low said the budget does have significant ongoing savings, from both a reduction of 44 positions in state governments and consolidation of state agencies.
“In the next biennial budget, that will mean $500 million in ongoing savings, “he said.
Baldacci acknowledged that his budget proposal “includes hard choices and shared sacrifice.” He said he tried to minimize layoffs in a state already hit hard by unemployment and avoided wholesale elimination of any human services programs.
“Instead of say ten hours of a particular service, we will limit a person to eight hours,” said DHHS Commissioner Brenda Harvey. “We are not proposing to eliminate any service entirely.”
Baldacci also rejected the criticism that the combination of reduced school aid and a reduction of $27 million in municipal revenue sharing will result in a shift to the local property tax of $100 million.
“We are saying there are opportunities to do more consolidation and cooperation that will reduce local costs,” Baldacci said. “Look at what we have done with the county jail consolidation; it is saving local property tax payers.”
Roughly $383 million of the budget shortfall results from lower than anticipated revenues. The rest includes obligations carried forward from the previous budget and new expenses encountered by the state. In the past year, anticipated state revenues have been reduced by $1.1 billion, Baldacci said.
Rep. Emily Cain, D-Orono, the co-chair of the Legislature’s Appropriations Committee, said no one should jump to conclusions about what is in or not in the budget proposal or what the budget will finally look like.
“We are just at the beginning of the process, “she said, “we will have a lot of questions before we complete our work on the budget.”
She said public hearings will likely start on the budget the first week in January.
Capitol News Service writer Mal Leary contributed to this report.