Mills administration details plan to curb state spending - Press Herald

A state government hiring freeze and delayed upgrades to technology are among some of the highlights in a plan to curb state spending released Wednesday by the administration of Gov. Janet Mills.

The governor’s three-part plan reduces spending by about $256 million but avoids deep cuts to government programs or layoffs for state government workers.

The plan also uses $97 million in federal funding for authorized public health and safety programs and transfers $70 million in increased state liquor sales tax receipts to the state’s general fund.

A state and U.S. economy soured by COVID-19 pandemic restrictions is expected to take a more than $520 million bite from anticipated state sales and income tax revenues by the end of the current fiscal year, according to state economic forecasters. They predict total revenue will be short by more than $1.4 billion over the next three years combined.

The state is currently in the second year of a nearly $8 billion, two-year budget and the state’s financial picture remains gloomy going into next two-year budget cycle as well. Revenues are expected to miss forecast by an additional $883 million. In early August, Mills ordered all state department and agency leaders to come up with proposals to reduce their spending in the current fiscal year, which ends June 30 of 2021, by 10 percent.

Kirsten Figueroa, commissioner of the Department of Administrative and Financial Services Russ Dillingham/Sun Journal

The plan to curtail, or slow and trim, spending was released by Department of Administration and Financial Services Commissioner Kirsten Figueroa.

Figueroa is the state’s top budget official, and her department also oversees tax collections and pays state government workers, among other functions.

Mills will review the plan before she is expected to issue what is known as a curtailment order, one of the powers Maine governors have to keep the state’s budget from falling out of balance, a requirement of the state constitution.

“While every state in the nation is facing significant budget shortfalls caused by the pandemic, our early actions have protected Maine’s fiscal stability in the short term and prevented significant impacts to the services that Maine people rely on,” Mills said in a prepared statement. “I will closely evaluate Commissioner Figueroa’s recommendations to further stabilize the state’s budget, and I urge Congress to provide additional aid to state and local governments, along with flexibility for funding already awarded, so that we can continue to preserve critical services for Maine people and chart a full economic recovery.”

Figueroa said in a written statement that about $125 million in savings could be applied to the state’s current fiscal year and that federal CARES Act funding would also be used to offset allowable Medicaid costs. Also in the mix are hiring freezes for certain vacant government positions; delayed technology updates; reduced spending on existing or future contracts; and the cancellation of conferences, projects and related travel, she said.

Another $130 million will come from revenues that went unspent in the previous fiscal year, which ended on June 30. Figueroa credited Mills for reacting quickly to the pandemic’s economic impacts to state government by ordering departments to implement “frugality” measures in March, including similar hiring freezes, travel reductions and conference cancellations.

Sen. Cathy Breen, D-Falmouth, the Senate chair of the Legislature’s budget-writing Appropriations and Financial Affairs Committee said the state entered the pandemic on a solid financial footing, which has allowed it to weather the current crisis with limited pain.

“It’s not as painful as it could be,” Breen said. “We have been fiscally prudent and I think this is proof positive of that.”

It appears that Mills’ plan would not require the Legislature to return for a special session to pass a supplemental budget this year and that work could reasonably be delayed until January of next year, when the next Legislature convenes, Breen said.

Republican members of the Legislature’s budget committee did not immediately respond to a reporter’s messages.

Congress is gridlocked on another round of coronavirus-related relief, with the Republican-controlled Senate proposing another $500 billion in aid, some of which would go to states. But the Democratic-controlled House wants more than $3.5 trillion in additional federal aid, including disbursements to state and local governments as well as to individual Americans and the unemployed.

Dean Staffieri, President of the Maine Service Employees Association, SEIU Local 1989, the union that represents the bulk of state employees, praised Mills and her administration for “responsibly” addressing the revenue shortfall caused by the pandemic.

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