An $838 million budget shortfall is only half of Maine’s problem. Boosting the economy is the other, more complicated, half. Augusta can cut programs and services to trim spending and balance the budget, but a sour business climate will feed into a relentless downturn.

Maine needs both spending cuts and economic stimulus. But given the example the federal government is setting – bailouts, get your bailouts here, red hot bailouts, two for a buck! – those ideas don’t always harmonize.

Gov. John Baldacci tackled the “easier” half – the budget deficit – earlier this week by announcing $140 million in further cuts, layoffs and rainy-day reserve spending.

Now, to stimulate the economy, the governor should push an idea he himself has broached: cutting Maine’s burdensome top income tax rate, which is seventh-highest in the nation at 8.5 percent, and starts at the meager threshold of $18,250 annual income.

Now, even in good fiscal times, cutting this tax is tricky. Staring down the barrel of an $838 million deficit only increases the degree of difficulty by a hard-to-calculate quotient.

Yet to break Maine from a deficit cycle spurred by economic slump, and maybe insulate the state from future troughs, cutting the income tax is an idea that deserves consideration.

In April, the Tax Foundation unyoked Maine from the weighty harness of a “most-taxed-in-all-the-land” ranking. But in doing so – the foundation admitted, oops, our math was off, so sorry – the think tank also said its conclusion wasn’t all wrong.

The income tax remains onerous, they said, and for one shining moment, Maine’s elected officials and the Tax Foundation found something they could actually agree on.

It was then that Gov. Baldacci voiced support for cutting the income tax, depending on the scope of the coming budget deficit. Well, the scope is now known.

And boy, it sure isn’t pretty. In fact, we’re comfortable calling it hideous.

But it’s still not enough to forgo cutting that 8.5 percent rate, which could be a strong economic stimulus in its own right. Revenue offsets could perhaps be found through another comprehensive look at Maine’s narrow tax base or pursuing aggressive, new efficiencies within the state bureaucracy.

If Gov. Baldacci can cut spending without wholesale increases in taxes and fees, and foster growth by reducing the income tax rate, he could put this state on the road to prosperity.

Or, at least get Maine off where it likely is now: on a deficit treadmill.