Baldacci answers critics, defends benefits cuts

AUGUSTA – Administration officials Thursday outlined Gov. John Baldacci’s plans to trim social programs in covering a $95 million revenue shortfall and meeting other unanticipated costs, such as higher than expected fuel bills.

Declaring the most vulnerable would still be protected, the Democratic governor hinted that, economically speaking, worse may be yet to come.

As promised by Baldacci in his State of the State address Wednesday night, the supplemental budget package as written now would not raise taxes or fees or touch rainy day reserves in the Budget Stabilization Fund.

Officials said about $40 million in savings to be applied against the revenue shortfall would come from cutbacks in human services, with a focus on reducing benefits to people whose incomes are too high to qualify for Medicaid.

Additionally, capping enrollment in a Medicaid insurance program for childless adults would save more than $5 million, while eliminating funding to the Maine Special Olympics would save $20,000.

In an interview with The Associated Press, Baldacci reiterated his State of the State assertion that his budget-balancing plan would not compromise the “safety net” that state government maintains for the needy.

Contrasting the complaints of several hundred budget critics who demonstrated at the State House on Wednesday with Kaiser Foundation findings that Maine ranks high in Medicaid spending for children, adults and the disabled, Baldacci said, “Somebody’s going to have to put the tale of the two cities together.”

Baldacci suggested that unsettling economic times dictate prudence.

“So the energy issue, the heating issue and the economy issue are front and center. And I think what we’re doing right now is, we’re saying, OK folks, [economic analyst] Charlie Colgan says it could get worse, the president’s looking at a stimulus package, we’re not done doing the work that we need to do. So get this done. Get these things in place. And then we’ll wait and see what happens in February. That’s when the consensus forecasting committee comes in,” Baldacci said.

Following up on Baldacci’s vow to pursue new government streamlining steps, administration officials said an unspecified merger of natural resource agencies – looking to combine four existing departments into one or two – would be counted on to produce $250,000 in savings in the biennium.

A reorganization of the Department of Professional and Financial Regulation that would scrap a commissioner’s position would not generate General Fund savings, but a reorganization of senior management within the Department of Health and Human Services could save $225,000 in fiscal 2009, according to administration officials.

Overall, the administration pegged the number of jobs that would be eliminated if lawmakers approve Baldacci’s supplemental budget package at 37.

Republican House leader Josh Tardy of Newport said he welcomed an approach that would avoid new taxes and leave reserves alone. Democratic House leader Hannah Pingree of North Haven said majority party lawmakers could be expected to be generally supportive but that human services cutbacks would face close scrutiny.

In a two-year General Fund budget of $6.3 billion, a $95 million gap is relatively small but is regarded by the Baldacci administration and lawmakers as a major challenge.

“It’s significant but I think there are ways we can make this work,” Pingree said.

Baldacci’s hands-off stance on using rainy day funds to bridge the gap appears to leave room for adjustment if General Fund revenue trends deteriorate further. An update by state forecasters is due by March.

Similarly, the governor’s no-new-tax pledge was issued in the context of the supplemental budget itself, and it remains to be seen how he would receive any proposal to boost tobacco taxes, for example, to raise financing for the state’s strapped Dirigo Health program.

“We’ve been having discussions,” Pingree said. “Clearly, Dirigo needs funding.”

Final budget action by lawmakers is not expected before March.

Baldacci administration officials said about 90 percent of the budget reductions being proposed for fiscal year 2009 would be ongoing and thus could help hold down any shortfall in the next biennium.

With state reserves at close to $160 million, Baldacci said he remained opposed to dipping into the pool to balance the budget.

Linking the level of reserves to the state’s bond rating on Wall Street, Baldacci added, “That’s a slippery slope I do not want to go down again. … That’s something that I don’t want to burden any future administration with.”

Assistant Senate Minority Leader Richard Rosen, R-Bucksport, said Republicans, too, would want to carefully review social service reductions.

“We’re going to have to examine them to ensure that those most in need of services are protected,” Rosen said.

Going further than Baldacci, Rosen said he believed another downward revenue adjustment for the General Fund is likely.

Administration officials said the supplemental budget package would provide several million dollars to cover higher-than-expected energy expenses.