Details of Budget Revisions Released

Press Release

Details of Budget Revisions Released

Governor John E. Baldacci today released the details of his proposed changes to the 2008-2009 State budget.

The supplemental budget addresses a $95 million revenue downturn that was predicted for the two-year budget during the February meeting of the Revenue Forecasting Committee (RFC).

The package contains no tax increases and does not rely on funds from the State's Budget Stabilization Fund to balance the budget.

"The slowing national economy has placed Maine in a difficult financial position," Governor Baldacci said. "But the same factors are also hurting Maine families and businesses. Now is not the time to add to their burdens. We must prioritize State spending, restructure government and make sure that our State is on firm financial footing going forward."

The revenue downturn is the second during fiscal year 2008. In December, the RFC also reduced revenue projections by $95 million. All told, revenues have declined by $190 million. Today's package builds on an earlier package of spending cuts, which was submitted to the Legislature in January.

"The temptation is to rush forward, use our reserves now and avoid the toughest choices," Governor Baldacci said. "We can't do that. We don't know how long the current economic trends will continue, and we won't know until April just how bad circumstances are. Things could still get worse."

Governor Baldacci also said that using the reserves could hurt the State's cash flow and force the State into short-term borrowing to pay its obligations.

"Short-term borrowing to keep the lights on is bad fiscal policy, and we should avoid it," Governor Baldacci said.

The budget revisions include a reorganization of the Department of Health and Human Services, changes to Medicaid and job reductions. Slightly more than 71 State government positions will be cut, including 20 as part of the DHHS reorganization.

Every State department and agency was required to make reductions. Efforts were made to limit the impact of cuts to health and human services, to protect Maine's poorest, oldest and sickest, and to reduce the effects on local school districts.

"There's no way to cut $190 million out of the State budget without creating new hardships for some people," Governor Baldacci said. "But I honestly believe that Maine taxpayers are near the end of their capacity to pay."

Of the $190 million, about $65 million is in fiscal year 2008, which ends June 30, and $125 million is in fiscal year 2009. With the changes proposed today, spending will decrease by $60 million in 2009 from 2008 levels.

"We must continue to push forward with government restructuring. Government has outgrown our ability to pay," Governor Baldacci said. "It's imperative that we continue to reduce administrative inefficiencies in education, to unify corrections and streamline government."

"It is our responsibility to act today in a way that not only solves our short-term fiscal problems, but also puts us on the path of sustainability in the future," Governor Baldacci said. "We must prioritize and cut spending."

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