Governor John E. Baldacci presented his priorities for restoring $78.7 million in cuts original proposed to close a budget gap created by the global recession and declining State revenues. Photo by Ramona du Houx

By Ramona du Houx

March 3, 2010

Augusta- In March, Governor John E. Baldacci presented his priorities for restoring $78.7 million in cuts original proposed to close a budget gap created by the global recession and declining State revenues.

With state revenue projections and the influx of additional Medicaid funding, Governor John Baldacci revised his latest state’s budget figures restoring more than half of the money that was originally cut from school funding in the second half of the budget cycle. The newest changes to the state’s budget revision restore nearly $37 million in cuts to health and human services programs and $8 million for higher education.

In December, the Governor presented a plan to close a gap of $438 million in the current two-year State budget. Modestly improving revenues and increased federal support make it possible to mitigate the impact of some of the proposals.

On March 1, the Revenue Forecasting Committee upgraded Maine’s two-year revenue picture by $50.9 million. In addition, the U.S. Department of Health and Human Services has made an administrative change in the federal Medicaid program that increased resources to Maine by $27.8 million.

“From the beginning, I have been committed to presenting a fiscally responsible plan to balance the State budget,” said Governor Baldacci. “The slight improvement in the economy and the increased assistance from the federal government allow us to address legitimate concerns in human services and education while also making investments in Maine’s long-term financial health. Most of the revisions are in aid to education. Our economy relies on us giving students the best education possible. The need to take care of our seniors is equally important, so changes have been made to maintain their quality of life.”

The Governor’s revisions:

• Restores $37 million in health and human services, including increased support for nursing homes, assisted living facilities, disability services, mental health crisis intervention and home-based services. It also proposes alternatives reductions of $13 million and new initiatives of $5.3 million.
• Restores $20 million for K-12 education for FY 2011.
• Restores $8 million for higher education for FY 2011 ($6 million for the University of Maine System; $1.7 million for Maine Community College System; and $267,139 for Maine Maritime Academy).
• Restores $6 million for municipal revenue sharing for FY 2010.
• Makes a $3.5 million payment for retiree health.
• Eliminates an $8.1 million payroll delay.
• Includes $1.75 million to fully fund the State’s obligation for disaster assistance.
• Includes $2.6 million to pay for a job creation bond package.

“I have placed a high priority on finding a bipartisan and cooperative path through these troubled economic times,” said Baldacci. “With these proposals, I believe we can give school districts and municipalities time to adjust to declining revenues, protect our core values and safeguard the State’s economy.

Sen. Bill Diamond, chairman of the Appropriations Committee, said most of the changes are likely to be adopted by the full committee. He said the committee will continue to look for alternatives to some of the cuts that remain in the human services budget.

“There are still many hard decisions that must be made in this budget,” said Governor Baldacci. “But during this difficult economy, I will not support higher taxes. Maine families and businesses cannot afford a greater burden.”

Ryan Low, Commissioner of Finance, said, “We listened to the pubic and the legislature to strike the right balance for these changes. We can’t continue to cut programs year after year. Our revenues are at the level they were in 2001. We worked to restore and replace. So, we have restored as much as we could while replacing other areas of the budget with something that will produce savings on a continual basis. Instead of patching holes every time there is a shortfall we are proposing structural changes that will see savings over a long time. It doesn’t serve us to keep programs going for a few months and then having to yank them.”

The Governor talked about those structural changes.

“I am also including a number of savings initiatives in this package that will reduce costs going forward, particularly in the Department of Health and Human Services,” said the Governor. “They include increased efficiencies at Dorothea Dix Psychiatric Center, standardized rates and reduced per member/per month costs in MaineCare.

In addition to the restorations, the proposal also includes funding for a targeted investment package, which will focus on job creation.

“We have an opportunity to put people back to work, to create jobs and grow our economy,” said Governor Baldacci.

Details of the Governor’s investment proposal will be released next week.