Republican radio address

For the weekend of December 26-27, 2009

Greetings, this is Bob Nutting, state representative from Oakland.

As a new year and a new Maine winter begin, the State Legislature goes back to work with a tough assignment. We just received Governor Baldacci’s supplemental budget for the next 18 months. His proposal reduces spending by $438 million to keep the budget in balance as tax revenues continue to decline. The current deficit is about $100 million; but the trend lines point to further deterioration through the rest of our two-year cycle, which ends in June of 2011. With these new cuts, General Fund appropriations will return to levels last seen in 2004.

The governor deserves credit for not increasing any broad-based taxes. A chorus of voices is now rising from various interest groups who want to hike sales taxes and cigarette taxes to fill the budget gap, but the governor understands that this is no time to increase the burden on Maine taxpayers. Too many folks are struggling in this long period of economic gloom, with high unemployment and home foreclosures. Our citizens have to make due with less; and so must state government. We have both a requirement and an opportunity to set priorities and become the government our taxpayers can afford and not the government we wish we could afford.

No one is pretending this will be easy. As the governor said when he announced his plan, we must cut the budget at the same time that the recession is increasing demands for government services. There are now thousands more citizens on MaineCare and other social welfare programs than there were just a year ago. And unemployment insurance rates next year will jump 65 percent to replenish the Unemployment Trust Fund. That $83 million insurance increase will put even greater pressures on small businesses already operating on the edge.

The governor’s proposal is just that – a plan or blueprint. The Legislature and the Appropriations Committee – of which I am a member – will spend many weeks this winter going over the governor’s adjustments before producing a final budget document. There will be countless hours of public hearings and negotiations as all aspects of these spending cuts are examined. But in the end we will have to hit the $438 million target to keep the budget balanced. The pieces may move around, but the puzzle will be the same.

Eighty percent of the state budget is consumed by two components. Funding for education, including higher ed, accounts for 50.5 percent. And the Department of Health and Human Services, including MaineCare, represents nearly 29 percent. As you’d expect, the major cuts come in those two areas. The budget for Health and Human Services will fall by about $68 million, which includes reimbursement cuts to hospitals and health care providers serving MaineCare patients. The cuts also affect home care programs and nursing homes. These providers have been shortchanged by Medicaid reimbursement rates for years. This will make their situation worse.

The public schools, K through 12, are slated for a reduction of $73 million. Their funding will be cut by $38 million for this academic year and $35 million next year. These are substantial declines that will force the schools to economize as best they can. We can expect to see pressure to increase property taxes around the state to mitigate the impact, especially since revenue sharing with municipalities also will be cut by an additional $27 million.

The list of reductions is long and detailed, but there is a troubling trend in one important respect. More than half of the governor’s budget initiatives are one-time funding cuts rather than structural changes that would better position us for the future. This is critical, because the state’s next budget is already poised for serious turmoil. Even when the economy improves, Maine will face challenges because of indebtedness and unfunded liabilities to the pension and health insurance trust funds for retired teachers and state employees. Those unfunded obligations total more than $8 billion.

In the next budget, we’ll also lose the federal stimulus money that has propped up the state. That will end on December 31, 2010. We’ve used $400 million of it for MaineCare. More than $100 million in stimulus money has gone to public schools. When that money disappears, the next governor and the next Legislature will have to cut even deeper unless the economy makes a miraculous recovery in the next 18 months.

We Republicans look forward to working to craft a responsible budget that protects Maine taxpayers and sets the state on a sustainable course. This is Bob Nutting, wishing you a happy new year.