Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

Budget projections demand new thinking

— The good-news, bad-news story on the state budget last week upon close inspection tilts heavily in the direction of the bad.

Maine wrapped up its fiscal year on June 30 with $56 million to spare, and that's good. But state budget experts cautioned that the gain is not a reflection of current conditions. In fact, most of the surplus can be attributed to 2007 income tax returns. As most Mainers know, things are not as rosy for 2008.

Money spent on fuel oil rather than at the mall cuts sales tax revenues. Higher unemployment hurts income tax receipts. A bad year for Wall Street can also mean fewer tax dollars paid. And then there's the general aversion people have to big-ticket items when the economy slows - not as many new cars are sold and construction falls -- which hurts sales-tax revenues further.

If these impacts from the economic cycle and higher energy costs weren't bad enough, consider that, even in good years, the cost of providing government services is rising faster than tax revenues. A big part of that is the rising cost of health care, not only for government employees, but through public programs that provide care to needy Mainers.

These trends and others add up to an expected $400 million hole in the state's next two-year budget cycle, which commences on June 1, 2009.

GrowSmart Maine, the Freeport group behind the Brookings Institute study of economic and environmental challenges and opportunties facing the state, plans to take hard look at Maine government in a report due out in early 2009.

That's a well-timed initiative, but even if it has as much impact as the Brookings study -- which gave a boost to a number of smart ideas taken up by the last Legislature -- one study alone won't change the course of state government in Maine.

This is a problem that's going to take a rethinking of how Mainers get government services, not just from the state, but from counties, cities and towns. At the moment, the current political divide in the state has Republicans pushing for cuts to the scope of state government services, especially Medicaid benefits. Democrats often work to hold the line on what they see as essential state services, even as they try to cope with mounting fiscal pressures.

A new way thinking will be needed, one that puts all levels of government and all taxing mechanisms in Maine on the table. Otherwise, the numbers will simply never add up.