s-statebudget-011609 Towns bracing for reduced state funding

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Gov. John Baldacci last week unveiled a fiscal 2010-2011 budget that attempts to reduce spending to meet a $330 million drop in revenues caused by the national recession and an additional structural gap of $508 million.
The $6.1 billion budget, which includes increases to hunting and fishing license fees, but no tax increases, is about $200 million less than the 2008-2009 budget. It’s the first time a biennial budget has shrunk since records started being kept in 1974 by the Department of of Administrative and Financial Services.
“Our parents and grandparents suffered through the Depression and World War,” Baldacci said Jan. 9. “They understood that tough times require sacrifice and ingenuity.”
The budget is not good news for state agencies, which will lose 219 jobs that will require 139 layoffs. Also, state employees making at least $50,000 a year would have to contribute to their insurance costs under the proposed budget.
Some school administrators, meanwhile, are breathing a sigh of relief that the budget does not include any further reductions in education spending beyond the governor’s previous $80 million curtailment order.
Department of Education spokesman David Connerty-Marin said that, while no further reductions are proposed in the $958 million 2010-2011 education budget, individual communities may not get the same funding as this year, since the state will still have to calculate allocations through its complex formula.
School and city officials in South Portland met Tuesday with their state legislators, who must now begin budget deliberations, to discuss the potential impacts on local services.
South Portland Superintendent Suzanne Godin said as the district begins building next year’s budget, administrators will seek to identify areas of potential savings that exceed the anticipated cut of nearly $895,000, since the Legislature has not yet acted on the budget proposal.
“We’re going to be extremely conservative,” said Godin, who directed administrators to build a zero-based budget that identifies areas for further cuts. “Right now, I’m pleased there are no added reductions, but we all know it may be significantly different once it’s gone through the Legislature.”
South Portland City Manager Jim Gailey said the city will have to account for a planned 10 percent, or $200,000 reduction in revenue sharing and another 10 percent, or $93,000 reduction in the business equipment tax reimbursement program.
Although the city coffers will not be directly affected by a proposed 10 percent reduction in the circuit breaker program, Gailey said residents who rely on the program will likely see their home budgets tighten even more than they already have.
“The circuit breaker does allow people to fill the gap for a small amount of individuals who use that money to either pay their taxes or health insurance costs,” Gailey said.
Scarborough Town Manager Tom Hall said the town is already struggling with increased costs for providing services and declining revenues. He said the town would have to make up any loss in state funding by either increasing local taxes or cutting services.
“None of the options are very appealing,” Hall said.
Superintendent of Schools David Doyle said he is still trying to figure out the precise fiscal impact the governor’s budget would have on Scarborough schools. Doyle said the Legislature is expected to deliver preliminary figures for the state education subsidy in early February. The Legislature, however, has been known to miss its own deadlines.
“It’s a real issue,” Doyle said. “There have been years we didn’t have the (subsidy figures) until late April or May.”
Cape Elizabeth Town Manager Michael McGovern said the proposed 10 percent reduction in revenue sharing with the state is a one-two punch. He said the revenue-sharing amount the town receives will already be smaller next year as municipal revenues throughout the state are declining.
The 2010-2011 budget does set aside $1.5 million in incentive funds for municipalities that consolidate services and administrative functions with regional school units.
The governor’s spokesman, David Farmer, said the proposed budget must still be vetted and approved by the Legislature.

Peggy Roberts and Sarah Trent contributed to this report.
Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net.