King orders agencies to cut budgets by 2% Tapping Rainy Day Fund an option

AUGUSTA – For the second time in the current fiscal year, Gov. Angus S. King has issued an executive order imposing an immediate series of budget cuts to rein in spending as the state prepares to confront a potential $180 million revenue shortfall over the next 14 months.

Additionally, King has sought an advisory opinion from the state attorney general in support of a plan to transfer large amounts of money from the Rainy Day Fund – money already dedicated to next year’s budget – for use in the current budget cycle.

King expects to fill much of a $90 million gap in the current fiscal year which ends June 30 by applying a large amount of $86.6 million from the state’s Rainy Day Fund that has already been earmarked for the 2003 state budget that begins July 1. Administration officials have stated that whatever amount of money the governor feels is needed from the Rainy Day Fund to balance the current state budget will have to be offset by June 30, 2003, in either matching revenues or comparable budget cuts.

In an effort to find some of that money, the governor ordered 2 percent cuts on each individual state department and agency.

A little after 5:30 p.m. Thursday and several hours after telling State House reporters he did not want to discuss budget problems that day, King signed the executive order and dispatched a letter to Maine Attorney General G. Steven Rowe seeking an opinion on his proposed use of money from the Rainy Day Fund.

Past supplemental budgets have not included special language giving the governor flexibility to draw money from alternative funding sources, such as the Rainy Day Fund. This year, however, legislative leaders and the governor agreed to add a release date giving him that flexibility.

“We were fortunate in the drafting of that language that says ‘no later than’ June 30, 2003,” said Janet Waldron, the governor’s chief financial officer. “What that language did was give us a window of opportunity to do as thoughtful a reduction as possible as opposed to going in and doing a slash and burn for two months.”

In prepared remarks, the governor explained that his May executive order included:

. An extension of the freeze on hiring for state employees.

. Tight restrictions on both in-state and out-of-state travel by state employees.

. A freeze on nonemergency capital purchases by state agencies.

The plan allows for exemptions in areas that include food, fuel, grants, rents, local education, University of Maine debt service and the state retirement allowance fund. Department heads who feel they are unable to comply with the spending cuts must submit alternative plans to realize the same amount of savings envisioned by the governor.

King said the executive order was not intended to compromise the state’s ability to respond to emergencies or threats to public safety.

“This executive order will place some tough restrictions on state agencies, but our goal in developing the order was to achieve savings without impacting our delivery of services to Maine citizens,” King said in his statement.

Neither the order, nor the governor’s press release, identified the precise amount of money King hoped to save from the 2 percent cuts in spending or other cost-saving measures. Similar cutbacks introduced with last October’s executive order produced about $25 million in savings.

“I’m not going to give you a number,” Waldron said about King’s latest executive order. “We haven’t even gotten the work programs in place for 2003 yet.”