If last year’s inaugural address by Gov. John Baldacci was bold – proposing a major school administrative consolidation and changing health care management – this year’s speech reiterated why such cost-saving measures, and some smaller new ones, must go forward.

Gov. Baldacci sought to reassure lawmakers and the public in his State of the State speech Wednesday that, with the cost-savings measures he proposed, Maine is ready to weather an expected further economic downturn. When he took office five years ago, the state faced a $1.2 billion shortfall, a gap that has largely been closed without broad tax increases while the state has begun to rebuild its reserves. At the same time, the state has dedicated nearly $1 billion in new funds to local schools as a result of a referendum that increased state funding for kindergarten through 12th-grade education with the expectation that the increased support from Augusta would result in lower property taxes.

In his speech and supplemental budget released Thursday, the governor again pushed for consolidation of state and county correctional facilities and services, a needed reform with details yet to be resolved. He proposed consolidating state natural resource agencies and a reorganization of the Department of Professional and Financial Regulation, changes that won’t save a lot of money but fit with a bipartisan push to remake state government to cut costs. These are on top of $38 million in cuts included in a curtailment order issued late last year.

There was the same moderation when it came to health care, with a push for more analysis of ways to fund Dirigo Health and a joint prescription purchasing arrangement involving the State Employees Health Commission, Maine Education Association and University of Maine System.

With Maine’s abundance of wood and reliance on fossil fuels, Baldacci called for new wood-to-energy initiatives to reduce oil consumption, which will save money and reduce greenhouse gas emissions. He also pledged to use state buildings as demonstration projects to test and model alternative energy use.

While the governor proposed thoughtful, if modest, plans for moving the state forward, Republicans, through Senate Minority Leader Carol Weston, proposed a laundry list of odd reforms. Sen. Weston called for the abolition of all state economic development agencies with that work to be turned over to Maine & Company, a private, nonprofit group. An analysis of the state’s economic development programs found redundancy and a lack of evaluation of outcomes. There are more prudent ways to solve this, however, than to turn over the state’s economic development programs to a private company without even determining if it the best one to do the job.

Sen. Weston also proposed a sales tax holiday, a feel-good measure that would not decrease the state’s tax burden at a time when the state needs more, not less, revenue.

There will be difficult debates over whether the governor’s path is the best way forward. Maine’s high taxes coupled with the state’s long-standing commitment to a comprehensive safety net are likely to focus the debate on consolidating and trimming government services.