Governor Paul LePage issued his curtailment order December 27, 2012 which will ensure that the state finishes the fiscal year with a balanced budget- as required by law. He personally did not impart the news to the press but past governor’s have. Nearly three quarters of the $35.5 million in cuts will come from Department of Health and Human Services (DHHS) programs and aid to public schools. These two areas account for approximately 80 percent of the state budget. Major cuts to education, both K- 12 and higher education represent nearly 45 percent of the entire order.
“We are carefully reviewing the governor’s spending cuts,” said House Speaker Mark Eves. “We need to get to work early to ensure our budget is balanced in a fair and reasonable way.”
As a result of the curtailment Maine school districts will have to cut an additional $12,579,756 from their current-year budgets. Bangor will face a $271,000 cut from the $16.48 million the city was originally allotted in the state budget. Portland is looking at a $870,000 cut from its budget of $14.06 million.
Municipalities and school districts across Maine have already faced budget cuts mainly as the result of the LePage Administration’s cost shifting policies. Programs funded by the state were cut thus shifting the burden of paying for these services to local municipalities. These cities and towns in turn have been forced to raise property taxes to fill the deficits. At the same time substantial tax-cuts for Maine’s most wealthy citizens were enacted bringing in less state revenues, which has added to and helped create budget shortfalls.
In addition to the cuts to K-12 education, the order takes $3,372,375 away from Maine’s public higher education institutions: the University of Maine System, Maine Community College System and Maine Maritime Academy. Some specific proposed cuts are:
• $2.5 million form the University of Maine System
• $724,000 in cuts at the Maine Community College System that are expected to result in course and faculty reductions
• a smaller budget for college courses for high school students
Meanwhile LePage continues to refuse to let bond funds, which voters passed, be allocated. Some of this funding was destined for higher education institutions, others for scientific research and development, some for transportation and some for Land for Maine’s Future program.
The Department of Health and Human Services will have to reduce spending by $13.43 million. The DHHS cuts affect programs throughout the agency, including the Bureau of Mental Health, independent living services for people with disabilities, the Office of Substance Abuse, and Maine’s only psychiatric centers – Riverview and Dorothea Dix. The order targets $1.5 million in funding to mental health and substance abuse providers, $1.4 million in child adoption services and $1.9 million in foster care services.
The Department of Corrections will see a $1.9 million reduction. The curtailment also includes leaving a host of state jobs unfilled. Some of those positions in the Department of Public Safety for the Maine State Police are needed.
“Those positions exist because there is work to be done,” said Rep. Peggy Rotundo, House Chair of the Appropriations budget committee. “I’m also very concerned with the DHHS cuts.”
State law bars the governor from using a curtailment to eliminate programs or to cut retirement system and debt service payments.
Democratic leadership said they would convene the Legislature’s Appropriations budget-writing committee ahead of schedule because of the curtailment order.
“Most of these reductions won’t go into effect until spring,” said Sen. Roger Katz, the former Republican mayor of Augusta. “The Appropriations (budget) committee will have a chance to weigh in and perhaps they’ll have different priorities.”
The $35.5 million curtailment is a temporary measure to keep the budget in balance as state revenue collections continue to fall short of projections. As LePage has not issued bonds, already voted on by the people, jobs that could have been created have been put on hold. This lack of job creation has added to the lack of state revenues, as people out of work tend not to spend as much in the marketplace. The Governor’s outspoken comments that have made headlines also contributed to businesses perception of Maine. For many his lack of job creation policies have forced Maine to “stand still” while the economy for the rest of the nation continues to improve. This current revenue shortfall can in part be attributed to a lagging state economy. According to the U.S. Bureau of Economic Analysis, Maine is the only state in New England where the economy shrunk this past year.
“Maine’s economy needs a boost,” said Senate President Justin Alfond. “We won’t cut our way to prosperity. It’s time for Maine to invest in our state. Let’s get more people working, shopping locally and moving our economy forward. We must put our state back on track.”
By law 49 state governments have to have balanced budgets, in order to achieve this when there are shortfalls sometimes a curtailment order is necessary. Today’s emergency like order is only the first of three looming shortfalls that the LePage administration helped to create and must address.
In addition to this $35.5 million general-fund shortfall, the LePage Administration is preparing a supplemental budget to close a DHHS shortfall of over than $100 million in the state’s Medicaid program. Lastly, for the two-year budget beginning July 1, 2013, LePage will have to address a structural gap in excess of $750 million, a significant portion of which can be attributed to a Republican-championed income tax cut that favors Maine’s richest citizens.
“How ironic that the governor and his allies preach ‘fiscal responsibility’ while continually creating budget holes and revenue shortfalls,” said Maine’s Majority executive director Chris Korzen. “It’s bad enough that the people of Maine keep waking up to headlines about missing money. Are we now supposed to take it in stride when kids end up shouldering the burden of their governor’s bad decisions?”
The new Legislature’s Appropriations Committee will meet Jan. 4. The full Legislature reconvenes Jan. 8 for the new session. LePage is expected to propose the state’s next two-year budget on Jan. 11.