Budget hearings debut King deficit plan

AUGUSTA – With about $12 million available from belt-tightening savings, the King administration begins laying out its plan in detail today for covering the rest of a $240 million revenue shortfall.

Administration officials intend to open their presentation to the Legislature’s Appropriations Committee with a catalog of the economic woes facing the nation and its states.

Commissioner Janet Waldron of the state Department of Administrative and Financial Services prepared a summary for the panel’s public hearings that notes the onset of a national recession in March 2001 and the continuing tax collection problems for both the federal and state governments.

“The four quarters of revenue decline, peaking with a 10.4 percent decline for the second quarter of 2002, are the worst [that] states have witnessed since WWII,” Waldron’s summary asserts, attributing the finding to the National Governors Association.

After moving through overviews of the state budget and revenue picture for fiscal 2003, which began July 1 and runs through next June, Waldron is expected to offer highlights of Gov. Angus King’s proposal for offsetting a remaining shortfall of about $229 million in an overall fiscal year budget of $2.7 billion.

Administration officials peg the portion of the current budget devoted to education at about $1.2 billion – 44 percent of the total. Of the total, budgeted general purpose aid for local schools in fiscal 2003 is $730 million.

Another 31 percent of General Fund appropriations – about $846.5 million – are to be channeled to the state departments of Human Services and Behavioral and Developmental Services. Planned Medicaid expenditures make up about $517.5 million, according to the administration.

The state Medicaid program, also referred to as Maine Care, comprises more than 19 percent of the total General Fund budget. Medicaid spending could also bring matching federal money of more than $1 billion.

According to the administration, two-thirds of Medicaid expenditures are for elderly and disabled Mainers, with one-third paying for services to children and adults. Administration officials say the governor’s budget-balancing package was developed with an eye toward avoiding broad-based tax increases, limiting reductions in funding for education and maintaining eligibility criteria for human services.

An initial analysis by the Appropriations Committee staff said that the King administration is seeking legislative endorsement of nearly $60 million in temporary curbs on spending that the governor has already implemented.

According to the committee staff, the temporary curtailment includes a $10 million reduction in general purpose aid, nearly $9 million in reductions for Medicaid, $4.6 million less for public institutions of higher education and the savings from three state furlough days.

Additional legislative action would be needed to generate savings or revenue of roughly $170 million more. One major King initiative would net an estimated $48 million by rescheduling payments under Maine’s business equipment tax reimbursement program.

Others envision savings of $17 million from the delay or elimination of tax reductions and gains of nearly $14 million from Medicaid provider taxes.

About $39 million could be made available to bolster the General Fund through roughly equal transfers from the state’s tobacco settlement money, the student laptop fund, the state Highway Fund and a working capital reserve.