Banking on rosier state revenue projections and the influx of additional Medicaid funding, Gov. John Baldacci revised his latest state's budget figures today by nearly $80 million, 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.

For an administration that has had little to celebrate when it comes to state revenues, the revision to Gov. Baldacci's supplemental budget comes as welcome news.

"My plan today restores $30 million dollars in health and human services," Baldacci said at a State House news conference. "It also identifies alternatives to earlier proposals that will help bring Maine's budget into balance."

The changes reflect nearly $51 million dollars in new revenue projections from the state Revenue Forecasting Committee and nearly $28 million dollars in new federal Medicaid funding. Those would effectively lower the state's revenue shortfall from $438 million to $360 million.

In addition to providing $37 million to health and human services programs, the governor's budget changes restore funding that will be welcome news to Maine school districts. "The plan restores $20 million for K through 12 education in 2011, $8 million for the University of Maine System, community colleges and Maine Maritime Academy," he said. "And for 2010, the plan includes a $6 million restoration in municipal revenue sharing to help communities weather the recession."

Education Commissioner Susan Gendron says the administration is attempting to address concerns raised by the Maine School Superintendents Association about how the state's schools will cope with reduced funding in the budget cycle that begins July 1.

The administration originally proposed a $36 million reduction; that cut is now $16 million. Gendron says the school managers will be able to use the additional $20 million as they prepare for significant cost-cutting and layoffs that are anticipated when schools open in the fall of 2011.

"They asked the governor to put all of whatever he could do for general purpose aid in FY '11 to help them prepare for a significant clip that we're projecting in FY '12, which is where I think we will see the most significant changes," Gendron said.

The revised budget also eliminates an $8 million payroll push for state employees that would have been inherited by the next Legislature and, in the process, restores so-called " longevity pay" for state workers.

It also eliminates three proposed state shutdown days. Still, the revised plan leaves a $35 million placeholder in the budget that the governor hopes can be removed by either the receipt of some anticipated new federal Medicaid funds or through further reductions by the Approriations Committee.

"So I feel that this obligation is in a place where it's conservative enough so that if it didn't come through we could do it as we've done it in the past, or if it were more than that and it was that plus something else, we at least had that portion covered," Baldacci said. "So I just took a cautious, sort of middle-of-the-road approach with it."

The governor's budget now moves to the Appropriations Committee, where Democrats and Republicans remain at odds to the tune of about $100 million.