AUGUSTA – Gov. John Baldacci announced about $10 million in spending cuts Friday to ensure that the $5.6 billion two-year state budget stays balanced.

The cuts, most from the Department of Health and Human Services, will not result in layoffs and will not apply to education spending.

Baldacci, a Democrat, announced Friday he was exercising his power of curtailment, which allows him to temporarily curb spending in some areas without legislative approval.

The governor said he was forced to make cuts based on economic uncertainty and because Congress passed a smaller state aid package than expected this year.

Legislative budget writers had expected about $85 million in additional Medicaid funding but instead received about $76 million.

Revenues for the first two months of the fiscal year, which began July 1, are about $22.5 million over projections, but that’s likely due to the timing of some payments, not an overall increase, according to Maine Revenue Services.

The governor said he did not make cuts to education because the school year has already begun and local districts will lose millions of dollars in federal stimulus money next year.

Lawmakers in both parties said they support the cuts.

“It’s a small curtailment, relatively speaking people have to understand that we’re not out of this yet and we have to have a lot of discipline,” said Sen. Bill Diamond, D-Windham, co-chairman of the Appropriations Committee.

“We also have to let (the Department of) Education, especially, know that we’re not making a cut now but you can plan on it in the future.”

Sen. Jon Courtney, R-Springvale, said he’s happy with the governor’s plan.

“I think (Baldacci) tried to minimize the impact on services and I think that’s good,” he said.

State agencies have been preparing for possible spending cuts since July, Baldacci said.

About $5.6 million is being cut from the human services department, but Commissioner Brenda Harvey said it would have minimal impact on people currently receiving services.

“Most of these reductions are not service cuts, at this point,” she said. “What we have done is tried to absorb funding that we otherwise would have used to expand or increase (programs).”

Harvey said the department finished the last fiscal year with balances in many programs because earlier cuts had resulted in higher-than-anticipated savings.

Other cuts include about $1.4 million in the state treasurer’s office and about $1.2 million in spending freezes through the Department of Administrative and Financial Services.

Although Maine revenues exceeded projections by about $70 million in the last fiscal year, the majority of those funds were required by law to go into the state’s rainy day fund.

 

MaineToday Media State House Writer Rebekah Metzler can be contacted at 620-7016 or at: [email protected]