Included in the $5.8 billion spending plan that takes effect July 1 is the requirement that the Legislature find and enact another $30 million in cuts for the 2011 fiscal year. The Appropriations and Financial Affairs Committee will lead that effort.
“Frankly, it keeps the pressure on us,” said Baldacci. “We’ve got to realize that if we want to maintain things that we’ve got to be willing to change.”
Sen. William Diamond, Senate chairman of the Appropriations Committee, said after the press conference that coming up with long-term structural savings, as opposed to one-time fixes, will be critical to avoiding more drastic and painful cuts in the future.
“The $30 million in savings has to be ongoing,” said Diamond. “It has to be structural changes. We can’t create a cliff for the next Legislature.”
Sen. Richard Rosen, R-Bucksport, the ranking Republican on the committee, agreed.
“We’ve got to have a glide path instead of a cliff,” he said. “One thing lacking in this budget is a visionary view of how we move through this recession.”
Earlier Thursday, the Appropriations Committee heard from State Treasurer David Lemoine that two credit rating agencies have given Maine high marks, but recommended that the Legislature enact permanent savings measures in order for the credit rating to be maintained. The state’s credit rating is important because it determines how favorable the terms will be when the state decides to borrow money.
“Our ratings are unchanged and stable, which in this economy is a major statement,” said Lemoine, who on Monday will sell some of the bonds enacted by voters a year ago.
Concurrently, the Appropriations Committee is beginning the process of sifting through hundreds of millions of dollars of proposals by Baldacci and other lawmakers for more borrowing. The committee will hold public hearings on those proposals on Tuesday.
Along with the hundreds of millions of dollars of cuts included in the measure, Baldacci emphasized that there remain investments that will prepare Maine for economic recovery. Among those are funding for a pilot program in Waterville for a structured preschool program, the creation of medical schools in collaboration with outside institutions, $77 million in spending on county courthouses and a plan to repay hospitals for past Medicaid liabilities.
On the downside, the budget reduces subsidies to towns and counties, increases fees for licenses and permits at the departments of inland fisheries and wildlife and marine resources, and cuts future Medicaid payments to hospitals and doctors.
State employees will be forced to endure 20 non-paid shutdown days, pay part of their health insurance premiums and sacrifice merit and longevity pay increases. Property owners and businesses will also be hit with reductions in the homestead exemption, tree growth and circuit breaker programs and the Business Equipment Tax Reimbursement Program.
“I haven’t seen times like this economically in my lifetime,” said Baldacci. “I’ve talked to people who were there in the Great Depression and the great wars. They gave me confidence that look, they came through it and so can we.”
