AUGUSTA (AP) – Gov. John Baldacci, preparing to unveil a revised supplemental budget package to cover an approximately $200 million gap, said Tuesday he would hold off from tapping state Rainy Day reserves, at least in part because Maine’s revenue shortfall could grow even worse.

Alluding to cautions from state tax officials about the potential for a negative “April surprise,” Baldacci also said his budget package would forgo tax increases and rely on “across the board” proposals for spending cuts.

A Baldacci aide said “across the board” cuts being proposed would not apply a fixed percentage in all areas. The aide also said the budget package would include few fee changes.

Lawmakers from both parties – including rank-and-file Democrats who hold majorities in both the House and Senate and on the Appropriations Committee, and leaders of the Republican minorities who are thought to generally oppose new taxes – said they were still awaiting details.

Baldacci, a second term Democrat, has said his revised supplemental budget will be released this week.

In a widely anticipated move last week, the state’s Revenue Forecasting Committee affirmed a second $95 million downward adjustment of General Fund revenue estimates in three months.

The panel scaled back its projections largely to reflect negative economic trends that are expected to constrain state tax collections.

One day later, in prepared testimony for the Appropriations Committee, acting State Tax Assessor Jerome Gerard offered two cautions on the new Revenue Forecasting Commission report.

Gerard, who is chairman of the forecasting panel, said a negative April surprise in tax collections could exacerbate the anticipated revenue gap.

Additionally, he warned that “some alternative economic scenarios” assume “a longer and deeper impact from the housing downturn and oil prices.”

Public hearings on elements of the new budget package are expected to be held next week.

As a new round of budget debate gets under way, the Maine Center for Economic Policy, in collaboration with Maine Equal Justice Partners, is releasing a report on MaineCare costs and how they compare with Medicaid programs in other states.

“On average, Maine spends fewer state dollars per state resident on its Medicaid program than do the other New England states,” Chris Hastedt, public policy director at Maine Equal Justice Partners, said in a statement. “At the same time, MaineCare delivers a wider range of quality services to our people than is true in many other states. In other words, by making use of the federal matching dollars available through Medicaid, Maine is getting more, but spending less.”

A month ago, House Republican leaders said Maine’s Medicaid system has been expanded too much and must be returned to its original intent to maintain a health safety net for those most in need.

“We need to get back to basics with Medicaid,” Rep. Bob Walker, a Lincolnville Republican who is a practicing physician, said in a statement. “The fact that Maine hospitals are still owed $280 million for Medicaid services from the past three years shows the program has grown beyond the point of sustainability.”

AP-ES-03-04-08 1549EST


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