AUGUSTA (AP) – Gov. John Baldacci’s administration said Monday state government faces a potential gap of $570 million between available resources and anticipated demands for the next two-year budget cycle that begins in mid-2007.

The structural gap analysis was released in response to a statutory deadline and projects a potential gap slightly larger than the one estimated in July by the Legislature’s Office of Fiscal and Program Review, which ranged from $525 million to $550 million for the 2008-2009 biennium.

Fiscal 2008, the first year of the next two-year state budget cycle, begins on July 1, 2007.

A looming $570 million difference between resources and demands contrasts with projected gaps of $964 million estimated in 2002 before Baldacci took office and $733 million two years ago.

The $570 million estimate for 2008-2009 amounts to 8.6 percent of an assumed appropriations base of about $6.6 billion, according to state budget director Ryan Low.

The 2004-2005 structural gap of close to $1 billion amounted to 16 percent of an assumed appropriations base of around $6 billion, he said.

“At the governor’s direction, we’ve worked hard to streamline services, reduce administration and improve accountability at all levels, but we recognize that more must be done,” Commissioner Rebecca Wyke of the state Department of Administrative and Financial Services said in a prepared statement.

“As part of the budget building process for FY 08/09, the governor has charged us to bring forward options for further reducing the cost of administration in the fastest growing segments of the budget, with the focus on education, health and corrections across all levels of government,” Wyke said.

Administration officials said more than one-third – $202 million – of the new $570 million structural gap estimate was attributable to increased state aid to local schools.

To catch up with a citizen-initiated requirement to hike the state share of local school funding to 55 percent, the state is putting up an additional $833 million over four years, administration officials said.

The administration report Monday pegged a Highway Fund structural gap at $82 million on projected allocations for the 2008-2009 biennium of nearly $785 million.

That projected gap was up from $44 million two years ago and from $12 million four years ago, Low said.

Following a new report by the state’s Consensus Economic Forecasting Commission, which meets Tuesday, Maine’s Revenue Forecasting Committee is scheduled to report by Dec. 1 whether current revenue estimates will be revised up or down or held steady.

The Republican challenger to Baldacci’s re-election issued a statement Monday saying the direction state government has taken under the leadership of the Democratic incumbent needs to be changed.

“Today’s announcement that Maine is facing a $570 million structural gap for the next biennium is further proof that we need to get our fiscal house in order. It absolutely must be priority number one,” said state Sen. Chandler Woodcock, R-Farmington.

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