Maine Faces A Budget Shortfall In Excess Of Half A Billion Dollars

Jul 27, 2020

The governor’s Economic Recovery Committee today told lawmakers that the state will need to invest hundreds of millions of dollars to recover from the effects of the pandemic, and even then it will take several years.

All Things Considered Host Ed Morin spoke with Maine Public political correspondent Mal Leary about the challenge facing the Legislature’s Appropriations Committee, as it anticipates a significant revenue shortfall on the horizon.

This interview has been edited for clarity.

The State House in Augusta in Dec. 2018.
Credit Rebecca Conley / Maine Public file

Morin: The recovery committee wants the state to spend money at a time when there won’t be as much money to spend. How is that going to work?

Leary: Well, that’s the big question of course. They got a preview of some expected bad news that when the revenue forecasting commission meets later this week, that group will take the economic projections, actual revenues that have come in in the last few months, and do a reprojection of revenues. Finance Commissioner Kirsten Figueroa says her guess is the red ink will be about $625 million. And it’ll be the job of the administration and the Appropriations Committee to figure out where that money is going to come from.

That’s a lot of money. What options do they have?

The first, of course, is cutting some existing spending. That was done during the recession, back in 2008-2009. Raising taxes is always an option, but not a very good one. Nobody wants to do that in a recession. The big hope here is that Congress will allow the state to use some of the federal CARES Act money it received. The state got $1.25 billion, but much of that has been spent or committed. The latest budget office spreadsheet shows about $321 million not spent or allocated. And the hope is Congress appropriates more money for the states and also provides more flexibility on how that remaining balance of CARES Act money can be used.

So there are a lot of tough decisions that have to be made. Does that mean there’s going to be a special session?

If Congress doesn’t provide more money, it probably means a session so that cuts could be spread out over most of the year. It will take time for the new Legislature that’s elected in November to get up and operating. And that would push a lot of those cuts into the last quarter or half of the year. And not all the needs are totally known yet. For example, today they got a report from the judicial branch. They’re seeking close to $13 million to renovate courthouses to make them safe for workers and for the public.

So it sounds like an awful lot is riding on what Congress does, it is that right?

Absolutely. And it’s not just if it provides aid to the states. It’s what else is in this package they put together. For example, there are many things they can do that will affect the economy, from changing the unemployment benefits to providing direct revenues to the state, municipalities, to schools to help them reopen. So until those figures are finally worked out and we know what Congress is going to do, the Legislature kind of is in a holding pattern, waiting to see what happens.