Republican radio address
For the weekend of May 2-3, 2009

Greetings, this is Josh Tardy, leader of the Republicans in the Maine House.

With seven weeks to go in the legislative session, lawmakers in the State House are putting on their game faces. It’s crunch time, and there’s a lot of important business left to do. Hundreds of bills have yet to come up for a vote in the House, including same-sex marriage, tax reform, and a bill to make sure that taxpayers can’t find out how much of their money is paid out to government workers.

In a routine year, those bills would dominate the Augusta scene. Obviously, they still will generate a lot of political heat and media coverage, especially the same-sex marriage issue that has already polarized the Legislature and the state. But in the final analysis, negotiations over the state budget will have the most immediate impact on Maine residents.

I’d like to say a few words about the budget as things come to a head, starting with the basics. In the first year of every new Legislature, a balanced budget must be written to detail state spending for the next two years. This new budget will take effect July 1. There are two ways to get there. The first is by simple majority in the House and Senate. A majority budget must be passed at least 90 days before the start of the new fiscal year to keep the money flowing after July 1.

The second way is to pass a budget by a two-thirds majority. With supermajority support, a budget can take effect right away. We now face a situation where that is our only option, short of a shutdown of state government.

This will be the most difficult state budget in many, many years. When the governor sent us his budget proposal in January, it called for total spending of $6.1 billion – a zero increase over the last budget. That was a responsible action by the governor, because the recession slamming the country was already eroding state revenues. He also ruled out increases in broad-based taxes – such as sales tax – to bring in more money. Republicans support him on that position.

Unfortunately for all of us, the state’s financial picture has darkened even more. The Revenue Forecasting Committee issued its final report on Thursday. According to their analysis, we will have to cut an additional $573 million. That includes $129 million in this fiscal year, which ends June 30. The rest, $445 million, must come from the biennial budget. But that’s not the end of it. The forecasters also project a $459 million revenue shortfall in the following two-year budget. That means the next governor and the next Legislature will inherit another fiscal mess.

With the requirement for a two-thirds budget, the Republican minority is very much in the thick of the action. You cannot get to two-thirds of the House and Senate without Republican support, and Republicans on the Appropriations Committee are working nights and weekends to make sure we have a sound budget, based on real numbers.

The governor outlined his updated budget plan on Friday. That came too late to be included in this message, but certain principles will have to apply to win our support. Given the magnitude of the problem over the next four years, it’s clear that no amount of gimmicks, fee increases and account sweeps can make much of a dent. If we want to put the state on a sustainable financial footing, we will need to make structural reforms of lasting impact. We will have to consider changes that would be off the table in normal times.

We are lucky in one respect. The Appropriations Committee estimates it can come up with about $200 million through a combination of things, including stimulus money. That will help.

There are two areas that account for 80 percent of the budget. One is education – from grade school up through the university system. The state spends about $1 billion a year in General Purpose Aid to local schools. Over the last four years, the state has increased this aid by $840 million above the normal levels. That was part of the deal approved by voters to reduce property taxes by 15 percent. The state lived up to its end of the bargain, but school and municipal spending kept rising faster than inflation. The cuts in property taxes never really happened – certainly not everywhere. The bottom line is that the state has spent an additional $840 million and has nothing to show for it. If we had banked that money instead, we would have no fiscal crisis today. Everyone wants our children to get a good education, but schools may have to do more with less for now.

The other major spending area is the Department of Health and Human Services. The vast bulk of that money goes to fund MaineCare, the state’s gigantic Medicaid system. It’s worth noting that the last time the state faced a major financial crisis, in 1991, the number of people on MaineCare stood at 110,000. Today the program has 270,000 people enrolled and costs $2.4 billion a year. This is no longer sustainable. Structural changes are possible here in benefit levels, co-pays and other areas.

State employees also will take a hit, probably with two-year pay freezes, forced furlough days and a requirement to pay part of their health insurance.

No legislator likes this situation. Nobody in the state likes this situation. But this is the hand we’ve been dealt and we have to play it through.

This is Josh Tardy. Thanks very much for listening.