Maine gov signs order that cuts spending by $35M

AUGUSTA, Maine (AP) -- Maine Gov. Paul LePage signed an order Thursday cutting state spending by $35.5 million.

The order has been anticipated since November, when revenue forecasters downgraded estimates for the current fiscal year that ends June 30, 2013. The spending cuts are necessary to ensure the state finishes the fiscal year with a balanced budget, as required by the Maine Constitution.

LePage said it's time for legislators to address structural problems with Maine's state budget rather than simply putting a Band-Aid on it year after year.

"Not unlike Washington, we must rein in spending before Maine falls off its own fiscal cliff," he said in a statement.

The Department of Health and Human Services is taking the biggest cut, $13.4 million, followed by the Department of Education, which is facing a $12.6 million reduction in state assistance to local schools across the state. The Portland School District faces the biggest cut in school aid at $870,000, followed by South Portland at $411,000 and Scarborough at $392,000.

Other notable cuts in LePage's order include the University of Maine System ($2.5 million), the Department of Corrections ($2 million), the Department of Administrative and Financial Services ($776,000), the Maine Community College System ($724,000) and the Department of Public Safety ($427,000).

Even with the cuts, the governor and legislators face additional fiscal issues.

The administration is preparing a supplemental budget to close a projected shortfall in the two-year budget that ends June 30 caused by a projected $100 million shortfall in the Department of Health and Human Services.

Lawmakers and LePage also will face challenges as they put together a budget for the next two-year cycle that begins July 1. Revenue forecasters' figures show revenues lagging behind estimates by $126 million during the two-year cycle.

While presenting the details of Thursday's order, Finance Commissioner Sawin Millett characterized Maine's fiscal challenges as "abundant and recurring."

Democratic legislative leaders said they would convene the Legislature's appropriations committee ahead of schedule to begin reviewing the cuts included in the curtailment order. The curtailment is temporary and can be changed or made permanent by the Legislature.

Curtailment orders are a common way to deal with short-term budget problems. The previous governor, Democrat John Baldacci, ordered curtailments in 2008, 2009 and 2010 as the recession took root.