Baldacci: More budget cuts down the road

AUGUSTA – The ink was barely dry on a second package of $95 million in budget cuts when Gov. John Baldacci said Thursday that yet another set of reductions is likely as state revenues continue to fail to meet estimates.

Meanwhile, the Democratic governor’s efforts to solve the budget crisis are stirring a revolt among members of his own party. One key legislator called Baldacci’s budget “unacceptable” and said many Democrats are “ashamed” of his proposals.

But in an interview, the governor warned that more budget difficulties may lie ahead.

“We are not out of the woods yet,” he said. “I am very worried we are going to have more challenges down the road.”

Baldacci said analysts at Maine Revenue Services are worried about a possible “surprise” when all the income tax returns are filed by the April 15 deadline. He said the “preliminary look” is not good for state revenues, even after the most recent downward reprojections.

“The economy is on the verge of recession,” the governor said. “Revenues are falling through the cellar.”

Baldacci said he hopes lawmakers move swiftly to act on the $190 million in cuts he has proposed so far. He said if revenues continue to drop, lawmakers will have to return in a special session to make further reductions.

“I think that is very likely,” Sen. Karl Turner of Cumberland, a key GOP member of the Appropriations Committee, said Thursday. “I don’t know how big [the budget gap] will be, but I think we will have more revenue problems to deal with.”

But Rep. Jeremy Fischer, D-Presque Isle, the House chairman of the budget-writing panel, said Thursday the governor is using the possibility of further cuts as leverage to get his “unacceptable” budget package approved.

“I don’t think most Democrats share the governor’s principles or priorities that the only way out of this is cutting poor people and education,” Fischer said. “Most of us see using the Rainy Day fund, and we see ways to enhance revenues and make other cuts that don’t affect poor people and education. Many of us are upset and ashamed at his proposals.”

Turner said he doubts the GOP will support taking any money from state reserve funds because it may be needed to offset future needs. He said raising taxes is a nonstarter.

“There is a wing of the Democratic Party that would have gone to tax increases even before this latest downturn,” he said. “It is pretty clear to me, and I think to the governor, that Maine’s people are saying, ‘Fix this problem without raising taxes.'”

Turner said he still believes a bipartisan budget is possible – as does Fischer. But Fischer said it will be a budget significantly different from what Baldacci has proposed.

“This budget crosses a line of decency that we can’t cross,” he said. “Some of his proposals just cannot stand and will not stand.”

Fischer acknowledged that the Appropriations Committee may face additional revenue problems, but he said it cannot craft a solution to the current budget based on what might happen next month.

Baldacci defended his budget choices, saying growing Maine’s economy has been at the root of the “very difficult” decisions he has made. He acknowledged that the proposed budget changes are significant and amount to a major rewrite of the budget passed a year ago.

“This was not easy,” he said. “None of this is easy. I wish I did not have to propose these cuts, but I have to. We can’t continue business as usual.”

Baldacci said a goal of his administration since he took office has been to hold down state spending while incomes of Mainers grow. He said Mainers can’t afford to pay more in taxes and he will veto any major tax increase.

“We can’t afford that,” he said. “The burden is too high and we have to cut our spending.”

He said his long term strategy was derailed by the voter-approved referendum requiring that the state eventually pick up 55 percent of the cost of elementary and secondary education.

“The idea was to lower the property tax burden, ” he said. “But we have seen the studies and the state has put hundreds of million[s] more into education, but it has not reduced the property tax burden on Maine people.”

Baldacci said he has been “very disappointed” that many Maine cities and towns have chosen to increase property taxes instead of using the additional state aid to education as it was intended.

The governor said his decision to make cuts in Medicaid and other state programs that help poor Mainers was very difficult and has taken a toll on him.

“They take a lot out of me,” he said of the budget reductions. “There is no question about it. I live with this. I internalize on this. It bothers me. These are real people.”

The Appropriations Committee will hold public hearings next week on the latest round of budget-cut proposals and hopes to complete its work on what amounts to a rewrite of the two-year state budget by the end of the month.