AUGUSTA (AP) – Already working to bridge a two-year budget gap once estimated at $340 million, Maine lawmakers will soon face a new shortfall of an additional $600 million, the governor’s top budget aide said Friday.
Citing lagging tax collections attributable to the economic downturn, finance chief Ryan Low predicted that Gov. John Baldacci’s pending $6 billion-plus general fund spending blueprint will be left with a hole ranging from $560 million to $590 million when a state panel formally lowers revenue estimates.
“A tough day. Very tough,” Baldacci said in a brief interview shortly after Low briefed the Legislature’s Appropriations Committee.
Details of how the Democratic governor will propose filling the new gap are not expected until the end of next week, after the state Revenue Forecasting Committee issues its update.
“You’re not going to be able to raise taxes and you’re not going to be able to cut people off in terms of the safety net,” Baldacci said.
“We’re going to cut, we’re going to consolidate, we’re going to restructure,” he said.
Low told Appropriations panelists the new shortfall would probably break down to a $100 million shortfall for the current fiscal year, which expires June 30, and two roughly same-sized shortfalls for the two years of the new budget cycle that begins July 1.
Baldacci boasts that his original budget plan for the upcoming two years, which would eliminate more than 300 jobs, was $200 million smaller than its predecessor. To date, the governor and legislative budget writers have been focusing on a combination of cuts, deferrals, minor taxes and fees and increased federal funding.
In line with Baldacci’s approach through six years as governor, the pending package would not increase the state’s income or sales tax.
That remains Baldacci’s position going forward and he appears unchallenged among both majority Democrats and minority Republicans on the Appropriations Committee.
“I do not believe we’ll be looking at broad-based taxes to solve this problem,” said the committee’s House chairwoman, Democratic Rep. Emily Cain of Orono. “Will it be discussed at some point? Everything is going to be discussed.”
But Cain said she did not see public support for major new taxes, “and I don’t believe it has legs in this building.”
Republican Sen. Richard Rosen of Bucksport, a ranking GOP member of the Appropriations panel, said broad-based taxes were not an option.
“I think we have a responsibility to not look to tax our way out of this,” he said.
Low told the committee that covering the first $100 million of a new gap could be managed by drawing on the state Rainy Day Fund and using some federal stimulus money through June.
Committee members agreed, although Rosen added, “it will certainly wipe out our remaining reserves and it will require the use of nearly all the remaining stimulus money that hasn’t been obligated.”
The Baldacci administration and its Democratic legislative allies say some budget-related action is needed by early May to prevent a disruption in payments to social services and health care providers funded by the state Medicaid program.
The National Conference of State Legislatures reported this week that 44 states collectively resolved a $40.3 billion budget gap in enacting their budgets for fiscal 2009, but that a new gap eventually climbed to $62.4 billion.
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