LePage looks to cut $35M in state spending

Scott Thistle/Sun Journal

Maine Finance Commissioner Sawin Millett, left, and Adrienne Bennett, director of communications for Gov. Paul LePage, brief State House reporters and other media on the possibility that LePage could freeze state spending to help resolve a projected $35 million shortfall in state revenue. LePage could use an executive power known as curtailment that would allow him to ensure the budget is balanced as required by the state Constitution. 

AUGUSTA — Somebody is making a list and checking it twice and it isn't Santa Claus.

Maine Finance Commissioner Sawin Millett said Monday that his office had recommended that Gov. Paul LePage consider freezing state spending by $35.5 million based on a forecast of declining revenues from sales and corporate income taxes.

LePage is taking the first steps to examine how he might use his executive power to put the brakes on government spending, at least temporarily, Adrienne Bennett, his communications director, said.

Millett said there was little doubt that a spending freeze of that magnitude would have some ramification for all 16 cabinet agencies in state government.

"You don't get $35 million from 16 cabinet agencies without some of them being in the multiple million of dollars," Millett said. The state is approaching the half-way mark on its fiscal year and being that short on the revenue side has to be viewed as "significant," Millett said.

He also noted that the law does not allow the governor to just terminate any single state government program and that any spending reductions are to be done in a fair and equitable manner.

The so-called curtailment of state government spending, under law, would need to be equitable and could be reversed by the state Legislature at a later date.

Bennett, who joined Millett at a news conference, said the precise details of those cuts and even if the governor would use the curtailment option were still being considered.

"It would be premature at this point to talk about any of the so-called low-lying fruit or options on the table before we talk with everyone that is involved with this process," Bennett said.

Bennett said it was "likely" the governor would use the curtailment option but no details were or would be announced until he had a chance to meet with legislative leaders in the Republican and Democratic parties.

"The state of Maine is facing its own 'fiscal cliff'," LePage said in a prepared statement. "Action must be taken to achieve a balanced budget, which the Constitution requires. I have begun to assess the options regarding the best approach to reduce spending.

Those cuts, or curtailments, would likely be temporary in nature, but as the state is facing a downward revenue forecast based largely on lower corporate income tax and sales tax receipts, the budget needs to be brought into alignment and it's the governor's responsibility under the law to do that, Bennett said.

"It's fair to say curtailment is likely," Bennett said. "But we need to still assess options and we need to identify some of those areas." 

In the past, the curtailment, one of the executive powers of the governor in Maine, has been used to settle the budget. LePage's predecessor, Gov. John Baldacci, used curtailments twice in his last term — reducing spending by $38 million in 2009 and by another $10 million in 2010.

Baldacci also used the curtailment power two other times during his time as governor.

While Millett and Bennett seemed to be signaling LePage would use the curtailment option, there were other possibilities.

Millett said it is possible the reductions could be folded into an anticipated supplemental budget that the next Legislature will have to assemble in January. 

That process is expected to also address another $100 million budget gap in the state's Department of Health and Human Services.

"There is one option that might be seen as a valid option of putting the two parts together," Millett said. "That is not a decision that has been made, or one that I would want to comment on, but that would be one option that differs from a sooner-than-later curtailment."

Bennett said action was needed soon, however.  

"We are by Constitution required to have that balanced budget, we have no choice, we are facing some very challenging fiscal times ahead of us and we need to address the $35 million fairly quickly," she said.

Incoming Democratic Senate Majority Leader Seth Goodall of Richmond confirmed Democratic lawmakers were set to meet with the governor Tuesday.

"The curtailment order is allowed under the law but most importantly is we should be working together, if all get around the table we can solve these problems," Goodall said.

Goodall said he was pleased the governor was meeting with Democrats on Tuesday — the length of the meeting will be held to about 15 minutes due to other obligations, including mandatory training that all incoming lawmakers must participate in.

The meeting will be the first between the new Democratic leaders and LePage, since Democrats recaptured majorities in the House and Senate, Goodall said.

Though short, the meeting could be a critical one and may set the tone for how LePage works with the new Democratic majority in the months ahead as he  proposes budget solutions that may look to trim upward of $140 million from state spending.

But what would be on the governor's first list remained unclear Monday.

"The frustrating and the challenging part is we are still waiting to see the details," Goodall said. "We are glad there is a meeting tomorrow (Tuesday) but it has been three weeks since the election and most importantly we just have to get down to work and solve these problems."

sthistle@sunjournal.com

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Comments

PAUL ST JEAN's picture

No matter where Governor

No matter where Governor LePage makes the cuts, the boo birds will be all over him like fruit flies on an over-ripened banana. democrats will support any and all cuts as long as they don't involve any of THEIR handout programs.

ANTHONY NAZAR's picture

Easy fix

Eliminate the tax cut you just gave your buddies, Paul. That'd be a good start.

They DO NOT create jobs. They stash money in the stock market or overseas tax havens, just like Mittens. The middle class creates jobs by increasing demand for consumer goods. If the middle class is broke to pay for your kiss to the wealthy, they can't spend and the jobs don't materialize.

Maybe that's too complicated for you, though. You could ask Alfond to explain it - I'm sure he'd be willing.

Bob Stone's picture

Your buddies, Tony?

I would remind Mr. Nazar that 70,000 Maine households, making enough to pay income taxes but by no means "rich" (as Lepage's jealous adversaries who continually use the class card term "rich"), will no longer be paying state income tax under the new tax laws. Paul must be enormously popular to have 70,000 "buddies".

The 55 basis point reduction for the high end payers amounts to a 6.5% reduction in taxes. Big deal. Let the exodus of affluent taxpayers continue. Soon, there will be no one left that even cares about 6.5%.

I just looked at the MaineCare expenditures today. They are $2 million a week over last year. And we just put the spend thrifts back in office. Watch them blow the doors off the state in 2013.

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