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November 26, 2008
State announces hard-times ahead
KINGFIELD, Maine (STPNS) -- AUGUSTA - - As local MSAD #58 and MSAD #9 superintendents prepare school board members and administrators for an anticipated crisis to come, Augusta last week made the news official. Governor John E. Baldacci ordered immediate spending reductions in an Executive Order by acknowledging a State revenue shortfall due to difficult economic times.
The order, called a curtailment, will help to ensure that the State's budget will terminate with balanced books as required by the Maine Constitution.
On Nov. 19, Ryan Low, Commissioner of the Department of Administration and Financial Services wrote a letter to the Governor summarizing the current assessment of the fiscal situation. "While not official yet, economists now believe the U.S. economy is in a recession and likely has been since the end of 2007," Low explained. "A rapidly deteriorating labor market and tightening credit standards have combined to offset the relief to low- and middle-income households," Low said stating that increased energy prices are an additional driving force.
"Economists now forecast that the recession will be longer and deeper than previously projected."
Low said in his letter that he projected that revenues generated for the General Fund will fall in fiscal year 2009 as low as $150 million in deficit. This amount is possibly more then what school officials projected at recent meetings.
"In light of the Maine Constitution's requirement for a balanced budget in each fis- cal year," Baldacci said in his Executive Order, "this presents a serious situation that must be addressed."
The Governor said that this issue will be a top priority once the Legislature goes back in session in December.
"Our country faces a dangerous recession, and Maine, like a majority of States, must deal with declining revenues," Baldacci said in a statement. "Today's, curtailment is the first of a series of steps we must take to bring spending in line with available resources."
It is anticipated by school officials that education subsidies will be hard hit in years to come.
MSAD #58 Superintendent Quenten Clark said that he believes that the State will hold back one subsidy payment for this fiscal year. This may result in a shortfall of about $300,000 for this year's budget.
It is explained that capitol gains, sales and excise tax revenues were dramatically down due to increased unemployment, dwindling home values and businesses closures.
"As we evaluated the steps we could take with this curtailment," Baldacci said, "we worked to limit the direct impacts on the people who need help the most - -vulnerable populations, children and public safety. After six years of constrained State spending, there are no easy choices," the Governor explained.
"For this year we need to decrease the budget," Clark said. "We need to avoid the spending of just about every dollar that we can avoid spending."
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