Balanced state budget in jeopardy Revenue deficiency may reach $60 million

AUGUSTA – Members of the Legislature’s Appropriations Committee expect Gov. Angus S. King’s balanced budget to take a hit of nearly $60 million this week, pending a vote of the state’s Revenue Forecasting Committee.

Charged with setting revenue projections for budget writers, the forecasting committee met for three hours Monday, but postponed a vote that would have pinned down the actual revenue decrease until Thursday when they expect to have further information.

Meeting on Monday afternoon with the Appropriations Committee, Grant Pennoyer, interim director of the Legislature’s Office of Fiscal and Program Review, told the lawmakers that the impact of the projected revenue drop, or how the governor would respond to it, would not be known until later in the week.

“However you slice it, this is not good news,” said Sen. Jill Goldthwait, I-Bar Harbor and Senate chairwoman of the Appropriations Committee.

Since the end of January, Goldthwait and the rest of her committee have been listening to requests from various state departments and joint standing committees of the Legislature for additional money for state programs and services. Action on many of the larger budget requests have been tabled until this week when the Appropriations Committee hoped to set aside extra time to examine the funding needs which, collectively, exceed King’s spending recommendations by $160 million.

Efforts to determine which requests will be funded have been further complicated by an estimated $58 million decline in revenues over the life of the $5.5 billion two-year budget.

The exact figure won’t be known until after Thursday’s revenue forecasting committee meeting. Goldthwait said the forecast will have an impact of $12.5 million or more on the current budget. That amount should be covered by about $14 million recovered from lapsed balances within various state departments. Lapsed balances are the unspent portions of departments’ budgets at the end of the two-year budget, which runs through June 30, 2001 for the current biennium.

Meanwhile, Appropriations Committee members are trying to meet a self-imposed March 9 deadline to get the 2001-2003 biennial budget to the House for consideration. If the House and the Senate can pass a budget by March 15, the tax and spending package would require only a majority vote, rather than a supermajority vote of two-thirds.

“I’m not entirely sure what these new budget figures mean or how much regrouping we’re going to do,” Goldthwait said. “I’m assuming we’re going to stay on our schedule, but clearly this is going to make it much more difficult to absorb what the committees were hoping for. It’s not going to be comfortable. It’s really going to hurt.”

Choices seem to be getting more difficult for Goldthwait and other members of her legislative panel. With health and education costs eating up 76 percent of the budget, there are few other places to go as budget writers consider program cuts and tax hikes. Broad proposals, such as departments taking a proportional cut or applying across-the-board budget reductions are simple but impractical solutions, Goldthwait said. Arbitrary percentages affect smaller departments more than large ones, she said, and many health entitlement programs draw $2 in federal funding for every single state dollar.

Finding a fair solution that doesn’t cut into funding for any department or program too painfully is a goal that continues to elude the budget writers. If there is a bright spot to the current budget dilemma, Goldthwait said the bleak news may finally make an impression on some lawmakers who apparently believe the state still is enjoying the record surpluses of the mid-1990s.

“People are not entirely with the new reality around here and if anything, this should make people understand we don’t have room for new programs and things unless we cut something we’re already doing,” she said. “So to the extent that this reinforces what was already not a very good situation and impresses upon people the magnitude of what we’re looking at, it could be helpful. Still, it’s difficult to imagine how we’re going to absorb a deficit of this magnitude without serious impacts on some programs.”