Gov. Janet Mills is pushing back the deadline for state government agencies to submit plans about how to reduce spending in the state’s next two-year budget.

Mills, a Democrat, issued an executive order Monday moving the deadline from Sept. 1 to Oct. 19, partially in hopes that Congress will deliver additional aid to states grappling with sharp revenue losses triggered by a pandemic-induced recession. That aid, if it arrives, would cushion the impact for agencies that are now seeking ways to reduce spending, both in the near and the long term.

“The extension is to give the departments and agencies more time to see whether Congress and the Trump administration act to provide additional financial relief and flexibility in previously awarded funds to state and local governments,” said Kelsey Goldsmith, communications director for the Maine Department of Administrative and Financial Services, which handles the state’s budget. “Without additional financial relief from the federal government, Maine, like other states, will face significant budget reductions.”

Maine is facing an estimated revenue shortfall of more than $520 million in the current fiscal year, which will end on June 30, 2021 – and a total estimated revenue shortfall of $1.3 billion over the next three years.

Sharp decreases in sales tax receipts – triggered in large part by a truncated tourism season that saw restaurants and hotels shuttered for most of the spring and operations constrained over the summer with restrictions meant to slow the spread of COVID-19 – have led to the losses in revenue for the state.

Because the state’s constitution requires a balanced state budget, Mills and the Maine Legislature soon could be forced to pass a supplemental budget package, whacking at spending, especially if sales and income tax revenues coming into the state continue to tail off in an economy that’s the worst the U.S. has seen since the Great Depression.

If the federal government, which is not required by the U.S. Constitution to maintain a balanced budget, does not provide any additional aid to states or does not increase flexibility for the use of some $1.25 billion in relief aid already sent to Maine, state lawmakers and Mills will have a difficult road in reconciling state spending with incoming revenues.

In early August, Mills also asked all state department and agency leaders to make suggestions for curtailing spending by 10 percent for the current fiscal year in hopes of making up some of what is expected to be an immediate $523 million shortfall.

Those spending curtailments were due for submission to Mills early last week but were still being finalized Tuesday, and Goldsmith said additional details on those suggestions would become available sometime next week.

The state’s current two-year general fund budget is pegged at just shy of $8 billion and is about 11 percent more than the previous two-year budget. Total state spending in 2020-2021, including federal funds, is set at about $9.4 billion, with more than $4.3 billion of that spending coming from general and highway funds revenue.

The state’s  forecast suggests the state will see $883.2 million in continued revenue shortfalls over the next two-year budget cycle, which will start on July 1, 2021.

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