Politics

January 16

LePage budget chief questioned about shortfall

Lawmakers must find $119 million in savings or new revenue to balance the budget, according to the administration.

By Steve Mistler smistler@pressherald.com
Staff Writer

(Continued from page 1)

click image to enlarge

Sawin Millett, the governor’s budget chief

Joe Phelan / Staff Photographer

Meanwhile, the budget gap discussed Wednesday could widen if lawmakers can’t find $40 million in savings or new revenue to fill a pre-existing gap in the state budget. If they do not solve that problem, property taxpayers will likely feel the brunt because the $40 million will automatically come out of the state aid to municipalities. 

On Tuesday, the LePage administration criticized a provision in the $40 million tax break bill that would pull money from the budget stabilization fund – or rainy day fund – to help avoid the cut in municipal aid.

There is $59.7 million in the rainy day fund. However, the fund is a key metric for agencies that assess the state’s ability to repay state-issued bonds. Last year Moody’s Investor Service assigned the state a negative outlook, in part because it had a “minimal” rainy day fund. Rebuilding the fund would improve the state’s bond rating, according to Moody’s 2013 analysis.

Democrats say that avoiding the $40 million cut in revenue sharing is a priority. However, there has been little consensus on how to trim or eliminate any of the $1 billion that the state pays in annual tax breaks or economic development programs.

Geoff Herman, with the Maine Municipal Association, told the Press Herald earlier this month that he wasn’t optimistic because of an “increasing willingness for the state to solve its fiscal problems on the backs of property taxpayers.”

Darkening the outlook is the political calculations of an election year. Cutting revenue sharing last year was considered a non-starter in budget negotiations. This year, if the Legislature enacts cuts to municipal aid and it results in higher property taxes or a reduction in services, many residents wouldn’t likely feel the effect until 2015, when cities and towns adopt new local budgets.

By then the 2014 elections will be over and the new Legislature can blame tax increases on the previous Legislature.

Steve Mistler can be contacted at 791-6345 or at:

smistler@pressherald.com

Twitter: @stevemistler

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