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( See Informational Letter #132 for update information. )

INFORMATIONAL LETTER:   131

POLICY CODE:   DB

 

TO:                   Superintendents of Schools

FROM:             Susan A. Gendron, Commissioner

DATE:              May 24, 2005

RE:                   Budget Advisory – People’s Veto Referendum

            In recent meetings with Superintendents I’ve been asked to explain the possible implications should the veto initiative be included on the November ballot.   In an effort to keep each of you apprised, I share the following information.   The veto initiative would ask the voters to reduce the FY ’06-’07 state budget by $450 million, thus creating the need to find other revenues or spending cuts to balance the budget.   If a sufficient number of signatures is submitted by June 28, 2005 and certified by the Secretary of State, the current plan for balancing the budget would be put on hold.

            The Governor would have two options available to him as the new biennium budget goes into effect on July 1, 2005.   He could call the legislature into special session during July to consider program cuts and/or alternatives to the borrowing.  

            Alternatively, he could order all state agencies to take an equal reduction of up to 5 percent to offset the shortfall in revenues.   While I do not want to alarm you unnecessarily, I do want to provide you with sufficient time to consider contingency plans should it become necessary.   I consulted with the Attorney General’s office to determine how to apply a possible reduction and after careful analysis we concurred that the fairest methodology was a reduction to the April 14, 2005 adjusted state contribution less debt service.   Suzan Cameron has prepared a spreadsheet for your use.   This spreadsheet may be accessed at:

http://www.maine.gov/education/data/eps/epsmenu.htm