December 25, 2012

Governor to soon issue $35.5 million spending cuts

Move to meet declining revenue forecast could come as soon as today

By Steve Mistler smistler@pressherald.com
Staff Writer

The LePage administration is expected to issue an order cutting state spending by $35.5 million as early as today.

Lawmakers have been anticipating the curtailment order for several weeks, since lower state revenues were forecast in late November.

In early December, Gov. Paul LePage announced that he would recommend the temporary spending cuts, but he didn't say when.

Adrienne Bennett, LePage's spokeswoman, indicated Monday that she expected the order to be announced this week. House Minority Leader Rep. Kenneth Fredette, R-Newport, said Monday that it could happen by Wednesday.

A confluence of budget matters is factoring into the gap between LePage's announcement and the curtailment order. While LePage's budget team is analyzing across-the-board cuts to offset the $35.5 million revenue shortfall, the governor is expected to propose the state's next two-year budget by Jan. 11.

The administration also is preparing a supplemental budget to close a projected shortfall in the two-year budget that ends June 30. That gap is because of a projected $100 million shortfall in the Department of Health and Human Services, specifically the state's Medicaid program, MaineCare.

The supplemental budget and the governor's two-year budget are expected to be released in close succession.

With the administration juggling all three budget matters, Republicans and Democrats are bracing for a whirlwind of fiscal deliberations. Last week, the new Democratic leadership announced appointments to committees, including the influential Appropriations Committee.

Fredette said Monday that he hopes the budget-writing committee will begin meeting right away. That would require authorization by the Legislative Council.

Jodi Quintero, spokeswoman for House Speaker Mark Eves, D-North Berwick, said the committee will convene as soon as there is work for it to consider.

Quintero said Democratic committee members have been briefed on the issues the committee will soon confront.

By law, the spending reductions in the curtailment order must be temporary. LePage has ordered his department commissioners to find immediate, temporary reductions.

The composition of the cuts will determine whether the Legislature will offer its own proposal. The Legislature does not have to ratify the governor's curtailment, but a counter-proposal by the Legislature would require LePage's approval.

The Legislature can make changes to the governor's supplemental and two-year budget proposals before ratifying them.

Democratic leaders said they are committed to helping to balance the budget, and the revenue shortfall shows the need to strengthen the state's economy and get Mainers back to work.

The administration, meanwhile, has argued that the curtailment order is symptomatic of government spending that requires structural changes, an argument that Democrats assume means more government reduction proposals from LePage.

Michael Allen, the state's associate commissioner of tax policy, told lawmakers in November that the revenue shortfall comes from a convergence of events including the "fiscal cliff" negotiations in Congress and a Maine economy that is not growing as quickly as hoped.

Allen said uncertainty surrounding the fiscal cliff -- automatic federal tax increases and spending cuts that could take effect in January -- is contributing to lower consumer spending and declines in income and sales taxes.

Democrats in the Legislature have downplayed that explanation, saying that more than 70 percent of the shortfall -- $26 million -- was projected in April, before the latest round of partisan negotiations in Congress raised concerns about the fiscal cliff.

Steve Mistler -- 791-6345

smistler@pressherald.com

twitter: stevemistler

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