State lawmakers wade into budget’s red ink

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AUGUSTA — The temporary budget cuts ordered by Gov. Paul LePage in December will reduce services, delay hiring of state workers, eliminate grant funding for some college students and cancel some contracted services.

State lawmakers got their first look Friday at how a $35.5 million state budget curtailment order is going to affect people, as they reviewed the order with Finance Commissioner Sawin Millett, who addressed the Legislature’s Appropriations and Financial Affairs Committee.

Hardest hit, mainly because they make up the largest portions of state spending, are the departments of Education and Health and Human Services. Together, the agencies will reduce their spending for the fiscal year ending this June by about $26 million.

Deputy Education Commissioner James Rier said the state has reduced school funding in all of the last four or five curtailments ordered by various governors. In all, Maine schools will lose about $12.6 million during the current fiscal year.

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As part of the $13.4 million in DHHS cuts, families that are paid subsidies when they adopt children out of state custody will be hit by the curtailment. Those ineligible to receive federal support for their adoptions are often given a per diem subsidy by the state of up to $26.25 per day per child. A reduction of about $3.3 million to that account means those subsidies will be reduced for about 800 families.

Another $2.5 million in DHHS spending reductions will come from salary savings from either turnover or leaving open positions unfilled. The department employs an estimated 4,000 workers.

Rep. Mike Carey, D-Lewiston, was interested in whether spending reductions on salaries for the Board of Gambling Control meant new enforcement officers for Maine’s expanded casino industry in Oxford were being put on hold.

Millett said that was another area he would have to get back to lawmakers on with the details.

Carey also questioned whether charter schools would be asked to absorb some of the spending cuts. Millett said that curtailing an amount for the estimated 100 students in the state’s charter schools would have added to existing confusion as to what districts pay or don’t pay for students who end up in charter schools, so the administration decided to leave it alone.

Rep. Peggy Rotundo, D-Lewiston, House chairwoman of the committee, said after the hearing that Millett and administration officials seemed forthright with the information they provided and appeared willing to work with the Legislature to settle on a supplemental budget.

Still, Rotundo said she couldn’t characterize the information she heard Friday as better or worse than expected.

“For me, it’s too early to tell,” she said. “You know, until the public weighs in, it’s easy for us to hear about a cut and hear about what the administration feels it will do in our community. It’s a whole ‘nother thing to have people whose lives are impacted by that cut to come in and testify before us. That’s really when you understand how these cuts are going to impact people’s lives — and that’s our job.”

Millett said spending reductions are only applied to the General Fund budget and the reductions cannot be applied to programs that share federal funds. The cuts also cannot be so drastic as to eliminate a program.

Beyond reductions in the amount of state funding going to local schools, many of the savings detailed by Millett involve agencies leaving vacant positions unfilled.

The law that allows curtailment is restrictive in that it can only be temporary in nature. The Legislature will work to pass a supplemental budget in the next few weeks to close the gap for the current fiscal year ending June 30, while it nearly simultaneously begins crafting a budget for the next two-year state budget cycle.

Some of the spending reductions are temporary, but lawmakers may attempt to incorporate some of those savings into the next full budget.

No new taxes

While Democrats, who hold majorities in both houses of the Legislature, mulled over the LePage reductions, Republicans were quick to warn the immediate answer to a budget shortfall shouldn’t be to raise state taxes.

House Republicans distributed a news release after the meeting noting that Mike Allen of Maine Revenue Services said recently that Mainers would pay an extra $355 million in federal Social Security payroll taxes after Congress allowed that break to expire.

“With recent federal tax hikes, now is the last time to be raising taxes on working Mainers,” Appropriations Committee member Rep. Tyler Clark, R-Easton, said in a prepared statement. “And it’s clear that we need to reduce spending at DHHS in a structural, long-term manner.”

Each state agency was asked to shoulder a portion of the burden of the reductions and some, including the Maine Public Utilities Commission, where able to pick up more than their share, Millett said.

Others, including the courts, where not able to meet the full amount, but even the smallest of state agencies stepped to the plate to contribute to solving the problem, Millett told lawmakers as he went through the 10-page curtailment order.

Unlike some of the curtailments ordered by Baldacci, LePage and this Legislature will not likely be able to “backfill” those spending cuts with anticipated federal funds.

During Baldacci’s tenure, lawmakers were often able to use federal stimulus funds to replace cuts from state revenue shortfalls and curtailments.

sthistle@sunjournal.com

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