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STATE HOUSE

Baldacci plan eases budget cuts

Despite increased revenues, next year will still see reductions

By Susan M. Cover scover@mainetoday.com
MaineToday Media State House Writer

AUGUSTA -- Gov. John Baldacci proposed to alleviate some of the deepest cuts in the state budget Wednesday by providing additional funds to support human services and education.

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MORE MONEY: Baldacci administration officials and state legislators listen to Gov. John Baldacci propose restoring $78.7 million in state budget cuts on Wednesday in his Augusta office. They are, from left, Baldacci chief of staff Jane Lincoln, Sen. Peter Mills, R-Cornville, Baldacci deputy chief of staff David Farmer, and Rep. Seth Berry, D-Bowdoinham, speaking with Sen. Bill Diamond, D-Windham.

Staff photo by Andy Molloy

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A revised state revenue forecast that projects a $51 million increase in receipts this fiscal year and next, and additional federal money, combined to give the governor and the Legislature $78.7 million of breathing room.

"Despite today's good news, we know that our economy is fragile and recovery is far from certain," Baldacci said during a news conference in his office.

Baldacci continued to characterize state spending as frugal, saying the current two-year budget will be $5.6 billion -- a modest increase from his first budget, seven years ago, that was $5.4 billion.

Even with the increased revenue, state lawmakers face a $360 million shortfall.

The proposals from Baldacci attempts to address some of the biggest concerns expressed by hundreds of people who testified in opposition to cuts to human services, cities and towns, and schools.

Many of those groups called for a tax increase rather than cuts, but Baldacci held firm Wednesday to his opposition to raising revenue.

"During this difficult economy, I will not support higher taxes," he said. "Maine families and businesses cannot afford a greater burden."

In human services, the original proposal called for 10 percent cuts in a number of categories to generate $32.5 million in savings. In the new proposal, the 10 percent cuts have been reduced or eliminated in many cases. The 10 percent cuts now will save $6.4 million, said Brenda Harvey, commissioner of the state Department of Health and Human Services.

The proposal also calls for some changes at the department, including the elimination of 22 positions at the Dorothea Dix Psychiatric Center in Bangor. Of those, 17 are vacant and five are part of a state hiring freeze.

During a presentation to the Appropriations Committee, Rep. Patrick Flood, R-Winthrop, asked Harvey why those cuts were just coming now, as part of a change package.

"I'm surprised about 22 cuts coming at this late juncture," he said.

Harvey said the department has continued to look at ways to reduce costs at the facility and that the recommendation just recently came forward.

In education, the governor originally proposed cutting $36 million in fiscal year 2011, but the new proposal reduces that to $16 million, Education Commissioner Susan Gendron said.

Baldacci's package of proposed changes to the state budget includes $2.6 million to pay for the debt service on a new $79 million "job creation" bond package. Democrats unveiled the $99 million package Tuesday. Baldacci said he will release the details of his proposal next week.

Other budget changes Baldacci proposed Wednesday include:

* $37 million more to human services to increase funding for nursing homes, assisted-living facilities, disability services, mental health crisis intervention and home-based services;

* $20 million more to K-12 education;

* $8 million more for higher education;

* $6 million more for municipalities;

* $3.5 million more for retiree health;

* $1.75 million to fund the state's portion of disaster assistance; and

* $8 million more to cover the cost of restoring state worker longevity pay and the elimination of three proposed shutdown days. Baldacci had originally proposed a payroll push to the next fiscal year to pay for this, but is now funding it with the additional revenues.

Appropriations Committee Senate Chairman Bill Diamond, D-Windham, said most of the proposals from Baldacci are likely to be adopted by the committee.

He said they would continue to look for additional ways to mitigate the existing cuts to human services.

"There are still deep cuts in some areas," he said. "We'll focus on HHS now and hopefully we'll be able to do more."

Baldacci said he's confident additional federal funding will cover a $35 million placeholder in the budget, and that it's possible there will be more federal support above that amount.

He said he'd also like to replenish the state's rainy day fund so the next governor has at least some money in the reserves from the start.

"My goal is to make sure that when I pass the torch, it is better than what I found," he said.

Susan Cover -- 620-7015

scover@centralmaine.com