Shortfalls could be re-evaluated

AUGUSTA – Unveiling a $272 million supplemental budget plan, Gov. Angus King acknowledged Tuesday that some cuts in human services would be sharp but said there is some chance the proposed cuts could be restored.

Stressing it should be viewed merely as a “possibility,” King suggested the state forecasting panel that reduced its projections of state revenue by nearly $250 million at the end of November might reproject revenue the other way – that is, upward – before winter is out.

King said the budget package he is presenting to the Legislature will contain language spelling out what new revenue should be used for, if it becomes available.

King said priorities for reversal would be Medicaid cuts in the Department of Human Services and cuts in mental health services.

He said he also would favor advancing the indexing of individual income tax rates and restoring money to the state Rainy Day Fund.

Administration aides, who said an upward reprojection by March 1 could allow lawmakers time to review various restorations, said the top priority would be reversing a cut in nursing home payments.

Last week in its regular monthly revenue report, the administration noted that experts have confronted “mixed signals” in assessing the depth and duration of the national recession.

“Most economists continue to forecast a slow recovery beginning in the second half of 2002. Recently, however, a growing number of economists are forecasting that the economy may begin to grow early in the first quarter of 2002,” the administration report said.

“Regardless of the timing of the recovery, there is general agreement that the early stages of the expansion will be mild,” the report said.

King told reporters Tuesday he was proposing to draw down virtually all of Maine’s $100 million Rainy Day Fund most reluctantly.

He said, however, that he saw no better option once a decision was made to maintain current levels of funding to local schools.

King said, for example, that not using the Rainy Day Fund could require a cut in general purpose aid to local schools of 6.8 percent.

General purpose aid, currently running at more than $700 million a year, is increasing by about 5 percent in this fiscal year and is scheduled to rise by about 3 percent in fiscal 2003.