Republican weekly radio address
For weekend of December 27-28, 2008

Season's Greetings and Happy New Year. This is State Representative Ken Fletcher from Winslow.

This is a time of year for resolutions and fresh beginnings, and that applies to the new Maine Legislature, which convenes on January 7th. We're all anticipating a tough session. Just as Maine families cut back on holiday festivities and gift-giving this year, the Legislature will have to figure out ways to cut back on state spending. The recession is spreading hardship across the land, with millions of Americans out of work. We've seen a wipeout of $11 trillion dollars in retirement savings, home values and family nest eggs. Consumers have slashed their spending to make sure they have enough money for life's essentials.

The biggest job for the new Legislature involves producing a budget for the next two-year period, which begins in July. This will be a daunting task. According to Maine's economic forecasters, the state's tax revenues for the next two years will fall $330 million dollars below projections. Meanwhile, the many departments and agencies of state government say they will need an additional $508 million just to maintain operations at current levels.

Overall, the state is looking at a budget shortfall of $838 million. That is serious money, but not even the Democrats are talking about raising taxes. Governor Baldacci recently stated that the people of Maine are fed up with tax increases. They made that clear when they rejected the tax on soda and health care on Election Day.

The governor got the message, and his budget proposal won't include any tax increases. Instead, we will see extensive spending cuts throughout state government. The governor has ordered all departments to reduce their budget requests by 10 percent. Whole programs may have to be eliminated. But more than 80 percent of the budget goes for just two things – aid to education and Maine's enormous welfare system, one of the biggest and most costly in the country. That will have to be trimmed back to a level that the taxpayers of our state can afford.

A good place to start might be Medicaid, which Maine calls Maine Care, This program provides free health care to approximately 270,000 Maine residents, which represents the second-highest participation rate in the nation. In other words, only one other state has a higher percentage of its population on Medicaid. We have expanded Maine Care to a point where we can no longer pay all the bills, even though we spend billions of dollars on it every year. Maine hospitals are owed more than $420 million for Medicaid work they did in earlier years.

Besides the downturn in the economy, other things have conspired to make the budget so challenging. One was a referendum in 2003 that requires the state to pay 55 percent of the cost of K-12 education. Voters approved the initiative but never said how the state should pay for it. And it's a big item. In 2005, for instance, the state spent $735 million for school funding. This year, the amount is $983 million. That's an increase in just four years of almost $250 million, during a period of declining enrollment. And we're still not at the 55 percent funding level.

It is imperative that we get state spending under control so we can meet critical future obligations. Maine's debt now exceeds $12 billion. This includes more than $7 billion in unfunded pension and health care liabilities for retired teachers and state workers. The Legislature has been under one-party control for 30 years, and during that time it has made promises to teachers and state employees that have become crushing burdens for taxpayers.

The state pension plan is underfunded to the tune of $3 billion dollars. By law, the state now must make huge annual payments to restore it to long-term solvency. In the new two-year budget, that payment will be $474 million. In later years, the cost balloons to more than $1 billion per budget cycle. And we still haven't even started to address the $4.7 billion shortfall in retiree health care costs.

A report last week rang other alarm bells. The American Society of Civil Engineers issued a report card that gave very poor grades to Maine's roads. The Maine DOT says we'll need to spend $3.3 billion over the next decade to modernize the state's roads and bridges.

Considering these enormous expenses, it's hard to imagine where we will get the money for the energy projects that will be essential to our way of life. Our budget priorities need a major adjustment, because Maine's future hangs in the balance.

This is Ken Fletcher. Thank you for listening.

###