AUGUSTA (AP) – Gov. John Baldacci, spelling out how he would make up for the second $95 million reduction in state revenue estimates in three months, unveiled a budget change package Wednesday that relies largely on new proposals to cut back planned expenditures, including on state aid to local schools.

Spending on local schools would be reduced by $34.1 million, although $11 million would not come directly from allocations to districts, administration officials said.

The Department of Health and Human Services would be counted on to produce $27.5 million in savings although again, according to administration officials, about $16 million would not come directly from services.

Funding for higher education would be cut by $9.3 million.

“This is a very difficult day for all of us,” Baldacci said at a Cabinet Room news conference.

The governor also said 71 state positions would be eliminated under his plan – nearly 50 by layoffs, according to the administration.

Baldacci, a second-term Democrat, said he was not proposing new taxes or transfers from so-called Rainy Day reserves.

In that regard, said Senate Republican Leader Carol Weston of Montville, “we agree with the premise.”

Some Democrats, however, have already expressed reservations about filling a $190 million budget gap solely through cutbacks, which would take place most heavily in the areas of education and human services.

“We’re all being affected by the national economic downturn,” House Speaker Glenn Cummings, D-Portland, said in a statement. “The Legislature will be giving the governor’s proposal a very thorough review. Certainly at a time when people need better training, improved job skills and a health safety net, we must make certain that these cuts are not shortsighted.”

Administration officials said that to cover the $190 million gap, about $65 million is needed in fiscal year 2008, which ends June 30, and $125 million in fiscal year 2009.

If the new changes being proposed were enacted, General Fund spending would decrease by $60 million in 2009 from 2008 levels, the administration said.

“We must bring our spending in line with our revenues,” Baldacci said.

“These cuts are painful to me,” he added. “And I do them reluctantly.”

Baldacci cautioned that negative economic trends mean that “we’re not out of the woods yet.”

April tax collections could hold the key, he suggested, to whether further budget adjustments become necessary.

To realize the savings target in K-12 funding, the administration said $6.5 million would come in education cuts from miscellaneous accounts, such as Learning Results implementation, and $5.2 million in delayed debt service, delayed projects and a one-year hold on funding for capital construction at private academies.

The proposed spending adjustments would have the effect of extending a scheduled ramping up of state funding for K-12 education to reach 55 percent from four years to five years – that is, to 2010.

A reorganization within the Department of Health and Human Services would eliminate 20 administrative and management positions, the administration said.

The package also would add a $25 enrollment fee for some MaineCare participants and book $3.2 million in new savings relating to curbs on the enrollment of childless adults in MaineCare.

To raise new revenue, the fee for state-conducted background checks would be raised from $25 to $31, worth about $533,000. A license fee for out-of-state manufacturers of malt liquor and wine would go up from $600 to $1,000, raising another $117,000, officials said.

“What we are going to have to look at is, do we agree with how he’s patched this together?” Weston said.

Baldacci budget chief Rebecca Wyke told the Appropriations Committee during a briefing Wednesday afternoon that the change package would raise less than $2 million in new revenue and relied on about $9 million in transfers.

Public hearings on various provisions of the package are slated to be held at the State House next week on Tuesday and Wednesday.

Last week, the state’s Revenue Forecasting Committee affirmed a second $95 million downward adjustment of General Fund revenue estimates in three months. Subsequently, acting State Tax Assessor Jerome Gerard said a negative April surprise in tax collections could exacerbate the anticipated revenue gap.

An analysis by the House speaker’s office said the Baldacci package would cut $7.1 million from the University of Maine System, $1.95 million from the Community College System and $300,000 from the Maine Maritime Academy.

AP-ES-03-05-08 1641EST

Copy the Story Link