AUGUSTA – Heads of state departments are crunching numbers to recommend another round of budget cuts if Congress fails to approve $100 million in Medicaid funds.

The curtailment exercise, which will become unnecessary if Congress approves the money this summer or fall, has become familiar in Augusta.

And, as usual, the largest departments are expected to take the biggest cuts, with $40 million coming from schools and $29 million from the Department of Health and Human Services.

Budget proposals are due in September, said Ellen Schneiter, acting commissioner of the Department of Administrative and Financial Services. That means the suggestions could be used in a supplemental budget that will go before lawmakers when they return in January.

Schneiter and the state controller are finalizing numbers from the budget year that ended June 30. The state will end 2009-10 with a surplus larger than $50 million, although she said the final figure has yet to be determined.

Some of that money could be used to reduce a potential shortfall in the current budget year, but there are strict rules for using surplus funds.

“We are watching July carefully in terms of revenues, and trying to get a feel for what the next several months might bring,” Schneiter said.

The uncertainty surrounding the economy and tax revenues has been compounded this summer by a lack of action in Washington on additional Medicaid funding for the states.

Many states, including Maine, approved budgets earlier this year that counted on additional federal support. Maine’s budget includes language that requires the governor to begin the curtailment process this summer if the federal money has not been approved.

Gov. John Baldacci has had to curtail government spending before to cover anticipated budget shortfalls. Curtailments are temporary cuts that are meant to control the budget while the Legislature is not in session.

All state departments were given budget targets, as was the judicial branch of government. The Legislature is not given a target by the executive branch, but follows a different process to cut spending, Schneiter said. “The Legislature has always, always, always come up with their proportional share,” she said.

Targets given to state agencies are proportional with their shares of the budget after certain factors, such as debt payments and teacher retirement, are removed, she said.

In addition to DHHS and education, the community colleges, the University of Maine System and Maine Maritime Academy face significant cuts. The combined effect on higher education is $11 million. Of that, $2.3 million would come from community colleges.

Maine Community College System President John Fitzsimmons issued a letter outlining target reductions for each campus. It shows a cut of $552,424 for Southern Maine Community College in South Portland.


MaineToday Media State House Reporter Susan Cover can be contacted at 620-7015 or at: [email protected]