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Gov. Janet Mills’ order Monday that state agencies freeze spending and hiring except for emergencies could free up to $252 million in unspent funds to help shore up a state budget likely to be thrown out of balance as a result of the coronavirus pandemic, but it’s likely not all of the money will be available.
The governor’s order on Monday came a day ahead of an expected announcement on whether she will extend the state’s current stay-at-home order that has shuttered many businesses and prohibited large gatherings.
Those measures are meant to limit the transmission of the highly contagious coronavirus, but they have taken a toll on the economy, causing record job losses and depriving the state of the sales and income tax revenue it counts on to balance its budget. Mills has talked about reopening the economy but has offered few specifics beyond working with nearby states and deferring to public health experts.
Although it is unknown exactly how bad the revenue fallout will be, Department of Administrative and Financial Services Commissioner Kirsten Figueroa has said the state could lose up to $200 million between mid-April and the end of June when the books close on the current fiscal year. Analysts have said the state could lose up to $1 billion by the end of next fiscal year, during which the state is budgeted to spend about $4.15 billion.
Mills also announced Monday that the state commissions charged with forecasting changes in the state’s economy and the amount of revenue available to the state will meet early to assess the financial damage from the pandemic.
In the meantime, Figueroa said in an email that the state can tap into $175 million that was authorized to be spent in a prior year but not used.
About 68 percent of that total is in the budgets of the Department of Administrative and Financial Services, which is in charge of state budgeting, and the Department of Health and Human Services, according to figures provided by Figueroa.
Some of that money could still be needed for programs and services authorized in the current state budget, Figueroa said.
“However, given the current circumstances, the Governor and the Administration are applying additional scrutiny to all requests to expend these funds,” she wrote in an email.
Figueroa also pointed to $77 million in funds remaining from the first three quarters of the current fiscal year, which ends June 30, that the state planned to spend but did not.
The state can also tap into its rainy day fund, which stands at $257 million.
When lawmakers passed the current state budget, they expected to have a $193 million fund balance by June 30 and a $113 million balance a year after that. Those numbers, however, are based on this year’s current economic forecasts and revenue projections, which were made before the coronavirus pandemic.
The governor also prohibited out-of-state travel for employees and all non-emergency hiring as ways to save money.
Figueroa also said the governor is asking state agencies to review contracts to see what services and projects might not be delivered due to the pandemic and try to adjust them to free up additional funds.
Watch: Janet Mills says Maine is looking at ‘cautious reopening’