When it comes to the projected gap for the 2006-2007 state budget cycle, any good news is welcome.

On Tuesday, Gov. Baldacci’s administration released numbers showing that the structural gap of $785 million had been cut by $52 million. It’s a second time the gap has been revised down. Earlier this year, it was estimated to be about $900 million.

Revenue projections are looking better for the state, and the administration has revised the assumptions it uses to determine the budgets for state agencies.

In addition, the $733 million includes part of a funding increase for education passed by voters earlier this year, which could cost the state as much as $250 million a year.

The Baldacci administration tries to put a good face on the projected deficit, saying a larger gap was closed without raising broad-based taxes.

That’s true, but a lot of one-time fixes were used. The state sold off its liquor business, restructured several departments, including a merger between the Department of Human Services and the Department of Behavioral and Developmental Services, and added Powerball, among other things. Those tools won’t be available again.

The state costs for Medicaid are going up, and, as Dirigo Choice begins to provide health care coverage next year, we will find out if the projected savings materialize or, as critics maintain, the program will become a financial drain on the state.

All of this is happening during a dangerous tax revolt, manifest this election with a referendum to cap property taxes. Tax reform – despite pressures on the budget – must be a priority for the Legislature and the governor.

Even with the good news that the budget gap is getting smaller, much work and many hard choices remain. Good news is good news though, and a smaller deficit is better than one moving in the other direction.