January 9, 2009     Reported By: A.J. Higgins

 Reductions in state spending, layoffs and the hope of a one hundred million dollar health care boost from the incoming Obama administration are among the highlights of Gov. John Baldacci's new two-year state budget. The package is $200 million smaller than the previous budget and revives a plan to transfer some prison inmates out of state.  Baldacci's plan leaves the sales and incomes tax rates unchanged but hunters, as well as recreational and commercial fishermen, will be required to pay more under the proposal.

Gov. John Baldacci responded to the ongoing economic slowdown with a new two-year budget that will require state government to do more with less, while holding the line on the state sales and income tax rates. "This budget will be difficult for all of us.  But to balance our budget and prepare our state for recovery requires a shared sacrifice and a committment to work for the greater good. This is not, and cannot be, business as usual,"  Baldacci said at a State House news conference.

The Governor's budget accounts for a $330 million decline in revenues caused by the national recession, and a structural gap between projected revneues and the cost of ongoing state programs of an additional $508 million. The proposal is about $200 million less than the current two-year budget, and Baldacci says that he believes it is the first time since 1974 that the budget has been decreased from one two-year cycle to the next, but he says it takes "great care to safeguard core government responsibilities:  keeping police on the streets, maintaining the state's ability to respond to emergencies, protecting vulnerable populations--our children, our elderly and our disabled--and limiting when possible the ripple impacts of necessary spending reductions on Maine's economy." 

Layoffs, while not massive when compared to the state's overall 14,000-member workforce, still figure significantly in the Governor's budget.  "I know that state employees are already being asked to shoulder a lot of the impacts of constrained spending, but we must do more.  This budget eliminates 219 positions, requiring 139 layoffs, taken with 94 positional eliminations in the supplemental budget.  The number of state employees will be at its lowest level since at least 1983."

"There's no question that there are some people out there who are hearing devastating news right now," says Tim Belcher, exceutive director of the Maine State Employees Association.  Belcher says the job losses will be difficult for employees and co-workers.  The union is currently engaged in contract negotiations with the state, but Belcher says his members are not interested in reopening their contract to take pay reductions now in order to save jobs.  "We see this as the bargain that was struck, and that they need this money just as much as anybody else does, and so we have not come forward and said, 'Gee, we'll reopen contracts.'"

The budget includes a placeholder for an increase in federal support for MaineCare, the state's Medicaid program. Baldacci conservatively estimates that nearly $99 million in increased funding for MaineCare will be included in President-elect Barack Obama’s economic stimulus package. The estimate is based on reports from Washington on increased funding for health care. Hospital reimbursement is continued at the same rates included in the governor's latest budget revision and the state's share of for local education funding declines from 51.4 percent to 50 percent. That was a concern for Senate Republican leader Kevin Ray, of Perry.

"We need to look at the details, you know particularly around some of the issues, such as shifting the tax burden to municipalities, making sure that hospitals can continue to provide quality health care.  But on balance it appears to be a relatively thoughtful approach."

House Majority Leader John Piotti, a Unity Democrat, says the Governor's budget contains plenty of pain for all.  "We recognize the need to pull together a responsible budget, and that's going to mean some pain, and I think we're going to share that pain, spread it around.  Mainers are used to working together when necessary, but in the final analysis we need to balance the budget, that's what our constitution requires, and we're going to work to do that."

Public hearings on the Governor's budget are expected to begin in February.