Lawmakers are facing the reality of the recession’s impact on state government revenues.

Before the recession, state government had surpluses. The nonpartisan Center on Budget and Policy Priorities said that midyear budget shortfalls have opened up in 39 states, totaling $34 billion. In Arizona, lawmakers considered mortgaging capitol buildings. Drastic financial remedies are no longer limited to California where state agencies issued IOUs to pay bills earlier this year. Maine is not alone, and the federal government is aware of every state’s legal obligation to balance their budgets.

“These are unprecedented times,” said Governor John Baldacci. “My budget proposal includes hard choices and requires shared sacrifice. We will maintain the essentials, and support job growth. And when our economy begins to escape the shackles of this recession, we will be better positioned for recovery. We will have a leaner, more efficient government built upon a foundation of fiscal responsibility.”

Earlier this year, the governor and Legislature addressed a $569 million budget gap with the passage of a revised $5.8 billion State budget. Since Dec. 1, 2008, State revenues for the current budget have been reforecast down by $1.1 billion.

“With the revisions I am submitting, the budget will fall to $5.5 billion dollars. To put that in perspective, seven years ago my first budget was about $5.4 billion dollars,” said the governor. “During that same time, we have increased funding for education by $352 million — even though we have seen student enrollment drop by about 20,000 students.”

Funding for education, including higher education, accounts for 50.5 percent of the General Fund. The Department of Health and Human Services represents 28.6 percent. The remainder of State government represents 20.9 percent.

The governor’s plan includes reductions across government, a $35-million placeholder for increased federal assistance for MaineCare, and the use of one-time tools to bring the budget into balance. There will be no tax increases, new fines, or fees.

Last year federal help for MaineCare was more than anticipated.

“We’re hoping that will be the case again; if it is, the budget could be amended, making less cuts. The governor has been very conservative in his estimate,” said DHHS Commissioner Brenda Harvey.

Harvey said the $68-million cuts at DHHS will result in small changes to many services provided by the state. Currently some caseworkers are on the job for ten long hours; that could shift to a normal eight-hour day.

“We are not proposing to eliminate any service entirely,” she said.

Under the governor’s supplemental budget the Department of Education will loose $73 million.

“Superintendents have met regionally to discuss where the cuts could happen, so that they won’t impact the classroom,” said Education Commissioner Susan Gendren.

Other agencies combined would shoulder $50 million in cutbacks. The budget revisions include 44 job eliminations. Since 2003, the State government workforce has been reduced by nearly 1,000 positions, and there would be three additional state furlough days.

The 2010–11 budget is the first in at least 35 years to be smaller than its predecessor.

Now the proposed supplemental budget will be reviewed in the Appropriations and Oversight Committees, and public hearings are scheduled.

“The governor’s proposal reflects the difficult economic times that we are facing. As we have in the past, the Legislature will review every line and engage the public in a serious discussion about how to best craft a budget that adheres to Maine values,” Senate President Libby Mitchell remarked.

Speaker of the House Hannah Pingree said, “The people of Maine will have the opportunity to have their voices heard and share how the governor’s proposals will impact them and our state. I’m hopeful that we will have a constructive dialogue and work together to find solutions that will protect our safety net during these very difficult economic times.”

IMPLEMENTING MORE EFFICIENCIES—

This supplemental budget proposal isn’t written in stone. In fact the governor is open to constructive ideas to help save funds. Scaling back government at the state, county, and city level is one way that will make government more efficient, while helping the state see savings year after year.

The State Finance Commissioner Ryan Low (photo) said, “In the next biennial budget, that will mean $500 million in ongoing savings.”

It’s important to note that out of the State’s General Fund revenues, 45.5 percent goes to 500 cities and 16 counties for local government.

“That’s a local government administration for every 2,500 state residents,” said Martha Freeman, director of the State Planning Office. “We can keep services available locally and at less cost if we move to regionalize local administration. These challenging revenue times should bring us together to find ways to work collaboratively on how we actually can better deliver services to our citizens as opposed to clinging to administrative structures of the past.”

The budget calls for $27 million in cuts to municipal revenue sharing and cuts to General Assistance.

“We must continue to streamline and reduce the size of State government,” said the governor. “We cannot use limited resources to support unnecessary administration. Instead, every dollar possible should be directed toward providing services to the people of Maine. We all must recognize that we can’t afford the comfortable structures of the past. We must be willing to chart a new course.”

Proposed streamlining efficiencies—

• To continue the consolidation of county jails and State correctional facilities through the Board of Corrections;

• Consolidate and reorganize the workload within the mental health program in DHHS to better utilize medical staff;

• Restructure Child Development Services within the Department of Education from 15 regional sites to nine;

• Establish a process to reorganize the four natural resource agencies (Agriculture, Conservation, Inland Fisheries and Wildlife, and Marine Resources) and to reorganize the Department of Economic and Community Development;

• Reorganize the bureaus within the Department of Agriculture from four to three.

In the last seven years, State government has gotten smaller and more efficient.

Successful efficiency measures that have been taken are reduced school administrative districts, the unification of county jails and the State corrections system through the Board of Corrections, consolidation of administrative and IT functions within State government, and combining Human Services departments.

“The governor makes a good case for consolidating Economic and Community Development functions. There are a lot of people essentially doing the same job at the local, county, and state levels, “said House Whip Rep. Seth Berry.

The rapid and effective pace that efficiencies have been made with the Board of Corrections is a model example for the state to follow in other areas of consolidation.

“The Board of Corrections has saved millions of dollars in state and property taxes. And it deserves continued support, which is why my budget includes $3.5 million dollars to fund it in 2011,” said the governor.

“It’s a real success story,” said Freeman (photo). “To develop the new Board of Corrections, we have been able to work and brainstorm together to change our administrative structures. The meetings have all been constructive, hopeful, and creative. All of us are surprised at how fast getting together, putting aside turf wars, being imaginative, and setting joint goals has really helped us create a better system, which costs the taxpayers less. It’s been amazing.”

Prior to the creation of the Board of Corrections, county jail costs were soaring by an average of nine percent annually. Those increases translated into local property tax rises. At the same time, the State adult corrections budget was growing at five percent. By comparison, with the new unified system, county jail budgets grew only by 1.8 percent in 2009.

“The budget revisions contain a roadmap forward to achieve efficiencies through greater cooperation and consolidation,” said Baldacci. “We cannot use limited resources to support unnecessary administration. Instead, every dollar possible should be directed toward providing services to the people of Maine.”