Gov. John Baldacci faces a tough assignment Thursday in delivering this year’s State of the State address: Convincing the people of Maine that state government has a good plan to meet its basic responsibilities in the face of a severe budget crisis.
Maine is in better shape than some other states. Faced with a $20 billion budget gap and no credible plan to close it, California Gov. Arnold Schwarzenegger recently advised the state to brace for difficult times. “There is no conceivable way to avoid more cuts and more pain,” he said.
Maine faces a shortfall of only $438 million, but that amount looms quite large in the state’s $5.8 billion biennial budget. Since the governor has repeatedly pledged not to raise taxes, cities, towns and state agencies ”“ and those who depend on them ”“ will be the ones feeling the pain.
School districts are already bracing for cuts in state aid to education. School boards must debate whether to increase the local budget, or lay off teachers and cut programs. The governor’s plan will also affect cities and towns by reducing revenue sharing and curtailing funds for general assistance and other state/local programs.
The administration also proposes an across-the board cut in MaineCare, the state’s Medicaid program. Critics say this will cut programs for the indigent, elderly and disabled, and is expected to cause the state to forfeit $12 million in matching federal Medicaid funds. The loss of funds for mental health services is forecast to create problems ”“ and costs ”“ for police agencies and jails.
There is widespread opinion that Maine simply cannot raise taxes. But legislators must also weigh the arguments that the administration’s plan weighs too heavily on the poor and the sick, and that it simply shifts some of the costs of government to local property taxes.
The crisis may be serious enough that the state must consider a tax increase as well as cuts in services.
A year ago, the governor acknowledged that the state and nation faced economic peril, but he took hope from the fact that federal stimulus funds and state initiatives would soon put some Mainers to work. “The dawn of a new economic day is not here yet,” he said. “But it is coming.”
Although the state’s economic difficulties have continued to grow, there is a widespread belief that the recession is waning. If this is true, personal and state income will gradually improve.
The state must be alert for good news as well as bad. Changing circumstances may yet enable the state to preserve endangered services without too much impact on taxpayers.
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