State’s budget talks enter final round > Negotiators battle over deeper cuts to Maine State Retirement System

AUGUSTA — Budget negotiators moved behind closed doors Thursday, where they tried to develop a package of deeper cuts to the Maine State Retirement System, as lawmakers approached their final work on the state budget.

The Appropriations Committee met on and off throughout the day, tying up loose ends, while the real action was conducted in private between representatives of Republican Gov. John R. McKernan and Democratic leaders of the Legislature.

There was a renewed focus on retirement benefit cutbacks following a Maine Supreme Judicial Court ruling Wednesday that said the state could cut back pension benefits without violating constitutional law.

Senate President Dennis L. Dutremble, D-Biddeford, a key figure in the closed-door budget talks, had told the Appropriations Committee they should count on cutting $195 million from the retirement system.

That figure was halfway between the $140 million already approved by Democrats and the $250 million sought by McKernan. But how the extra $55 million in cuts would be accomplished remained to be spelled out.

The Appropriations Committee was awaiting the recommended plan for the retirement system on Thursday night and that was viewed as the major obstacle to achieving a consensus budget agreement.

If the committee finalizes the two-year budget by Friday, then the full Legislature can come back Monday for debate and voting on the budget. Most observers think whatever mix of taxes and cutbacks is contained in the final budget, it will have a hard time winning the necessary two-thirds majority.

In addition to new benefit cuts, the retirement package may contain a modification to the Democratic plan to defer $100 million in payments to the retirement system, paying it back over the next 25 years.

McKernan has said he strongly objects to the deferment, even though his own plan to reamortize the system’s entire debt over 40 years carries far greater long-term costs.

“This is absolutely the worst part of the year for all of us,” said Sen. Judy A. Paradis, D-Frenchville, Senate chairman of the Human Resources Committee. “We lose control of the process in a way. There has to be this grandstanding, this proselytizing, this bullying and now we’re going to sit down and do it.”

House Republicans were pushing for emergency legislation that would give McKernan the power to keep state government operating without a shutdown even if there’s no budget in place by midnight Wednesday, June 30.

“I don’t think any legislator wants to be here all summer and fall, but by the same token, we do not want decisions made with the threat of a shutdown,” said Rep. Stephen M. Zirnkilton, R-Mount Desert, assistant House minority leader.

Zirnkilton said some Democratic leaders were reluctant to give the governor continuing-resolution powers.

The committee also was considering requests to restore money to programs that had been hard hit by cuts, even though that meant adding to the cost of the budget.

In one such significant “addback,” the panel voted 10-3 to add $7.8 million to General Assistance, the state-municipal welfare program. The addition means General Assistance, currently funded at $9 million a year, will be funded at $6.9 million a year.

The committee earlier had voted to fund General Assistance at $3 million a year, a level some municipal officials said would create homelessness. McKernan had proposed abolishing the program outright.

“Nothing’s over until it’s over,” said Christopher St. John of Pine Tree Legal Assistance, “but it appears to me the majority of the committee have been persuaded by the Maine Municipal Association that this is the minimum amount of money necessary to meet people’s needs.”

St. John also was hoping that some money would be restored to the budget for AFDC, which has sustained an 8 percent cut in benefits.

Attorney General Michael E. Carpenter, meanwhile, lingered near the Appropriations chamber all day, hoping some money would be restored to the budget for the Attorney General’s Office which otherwise was in line to lose several of its attorneys.

The Appropriations Committee also dwelled on smaller matters.

They accepted a budget amendment by Sen. Harry Vose, D-Meddybemps, that will allow the town of Charlotte to get a new valuation for calculating school subsidy.

Charlotte and other Washington County towns have been hit hard by the plan to return to the school funding formula over two years. Charlotte stands to lose about $127,000 of $327,000 in state aid next year if its state valuation stands.

On another matter, the committee endorsed a move by Rep. Michael Michaud, D-Medway, to exempt the teachers at schools in the unorganized territories from unpaid furlough and shutdown days.

Over the last two years, teachers in the unorganized territories, who are state employees, have taken the enforced days off, but substitute teachers have been hired, so no money was saved.

The new state-employee contracts, awaiting ratification, call for 15 furlough and shutdown days over the next two years, compared with 34 furlough and shutdown days in the last two years.