New Maine Legislature Faces Serious Challenges

January 7, 2009

New Maine Legislature Faces Serious Challenges

Let me begin by thanking all of you who supported me in this last election. I’m honored by your confidence in me and delighted to be starting my second term in the Legislature. I look forward to representing the interests of the residents of my House District, which includes Chebeague Island, Cumberland, Long Island and part of North Yarmouth.

The next six months will be a difficult stretch for the new Legislature. The revenue streams that feed state government and its countless programs are slowing down dramatically as the recession worsens. Maine is one of more than 40 states now facing serious budget deficits. If it’s any consolation, our fiscal predicament is nowhere near as dire as in some other states, but it is still rather grim.

The first order of business in Augusta will involve dealing with Governor Baldacci’s proposed supplemental budget for the current fiscal year, which ends on June 30, 2009. The state’s economic forecasters have projected a $140-million shortfall. To close that gap, the governor’s plan cuts spending by $95 million and takes $45 million from the state’s “rainy day” fund, which now stands at about $160 million.

The cuts in the governor’s proposal include a $27 million reduction in aid to education, the closing of a prison housing facility and reduced reimbursement rates for hospital-based physicians who handle patients on MaineCare, which is the state’s name for Medicaid.

MaineCare provides free medical and dental care to about 270,000 people. That is the second-highest “participation rate” in the country. In other words, only one other state has a higher percentage of its population on this program. Maine’s $2.4 billion Medicaid budget has become a major financial burden. This $2.4 billion grows to a total two-year cost of about $7 billion with the federal “match,” but even that huge amount is not enough to meet all the costs. The state owes $426 million to Maine hospitals for costs run up by Medicaid patients in earlier years. The dilemma is how to help those in need while controlling runaway costs.

The $140 million “supplemental” spending reduction must be passed by the Legislature in one form or another. Lawmakers will tangle over exactly which cuts should be made, but we have no choice regarding the overall total. And as tough as these cuts will be for those affected, they are small potatoes compared to what’s coming.

Once this supplemental budget passes, the Legislature will turn its attention to the main event – production of the big state budget for the next two years. This is where things could get rough.

The governor presented his 2010-2011 biennial budget to the Legislature on January 9th. It must account for a projected revenue decline of $330 million and an additional $508 million in requests to keep state government operating at its current level. In short, the final budget could be $838 million less than originally anticipated.

Some of the cuts will be painful; and some may shift costs down to the local level. There may be pressure to raise taxes, but the governor has promised that he will not increase taxes to get us out of this mess.

It’s important to remember that the governor’s budget is just the starting point for negotiations. His budget will be dissected in the legislative committees that have jurisdiction over all parts of the government, from criminal justice and veterans affairs to marine resources and inland fisheries. The heaviest action will take place in the Health and Human Services Committee, which has jurisdiction over the Department of Health and Human Services, with its 4,000 employees and the gigantic Medicaid program. The Education and Cultural Affairs Committee also will be deeply involved in budget work.

Two items have greatly impacted Maine’s budget in recent years. First was the referendum that ordered the state to pay 55 percent of the cost of K-12 education. In 2005, for instance, the state allocated $735 million for school funding. This year, the amount is $983 million. That’s an increase in just four years of almost $250 million – per year – during a time of declining enrollment. The goal was to reduce property taxes, but the results have been mixed.

The other big item involves paying down the unfunded liability in the pension fund for teachers and state workers. The plan is underfunded by about $3 billion. A citizens’ referendum forced the state to restore it to long-term solvency, but the costs are huge. The payment will be $474 million in the upcoming budget. By the time that $3 billion deficit is paid off, in 2028, it will cost the taxpayers of Maine nearly $8 billion, including interest. In short, because the Legislature promised benefits to teachers and state workers and then refused to fund them on a pay-as-you-go basis, the taxpayers will have to hand over an additional $5 billion.

It’s going to be an action-packed legislative session. I’ll provide reports along the way to make sure residents of our area know what’s happening.

Rep. Meredith Strang Burgess is serving her second term in the Maine Legislature representing District 108, which includes Chebeague Island, Cumberland, Long Island and part of North Yarmouth.

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