District 8 Legislative Update - May 21st, 2009
May 21, 2009 -
Hi all,
At 2:30AM Tuesday morning, the Appropriations Committee unanimously passed the 2010-2011 biennial general fund budget. I hung in there until 9 pm and left after all the educational pieces were moved into the budget.
It was amazing yet frustrating being in the Appropriations room at the end. It was incredible to witness the restoring of so many essential programs and services important to Mainers. Of course, the hard part was knowing that even with all these small victories, over $569 million in new cuts were made!
Because this is the biggest issue in the Legislature these days, I've decided to dedicate an entire email update to the subject. Are you ready for some numbers?
To check out more budget details, click here.
In mid-April, the State began receiving report after report of declining revenues. We also knew that raising taxes was not an option because the Governor would veto, so we had little choice but to make do with what we had.
In normal economic cycles, the 2010-2011 state budget would have grown from $6.3 billion to $6.8 billion, an increase of $500 million. As we all know, these are no ordinary times, and the final biennial budget has been reduced by $1 billion, to $5.8 billion because of sharp declines in revenue in 2009, 2010, and 2011.
How do you remove $1 billion from the budget?
* $409 million from Federal Stimulus funds
* $116 million from the Rainy Day Fund (if there were ever a "rainy day," this is it)
* $118 million in additional revenue from tax rate changes and revenue recovery (these changes, on average, will impact every taxpayer by an additional $9 on their State income taxes)
* $30 million of savings by streamlining state programs and service delivery
* $43 was reduced in revenue-sharing to cities and towns
* $34 million coming from initiatives impacting state employees
More on these last two aspects below.
Big Ticket Item for Portland: Education
As you may know, because of the stimulus funds, K-12 education in the City of Portland will be getting $3 million in new money for our schools for 2010. This money is instrumental in making sure that, in conjunction with the City budget, Portland will not see property taxes raised this year. However, this money is a one-time deal, and for 2011, we're looking at a structural gap of $3.6 million for Portland schools.
On the brighter side, we restored approximately $80,000 in funding for Portland's Adult Education in the final budget. The cut was reduced to $20,000. This smaller cut could not have been more timely, considering that many Portland adults are training for new jobs and earning their GEDs. The current Portland Adult stats are off the charts: job skill enrollments are up over 28%. Of these students, over 47% of them are first-time students!
Another Big Loss for Portland: Revenue-Sharing
Another big ticket item for Portland is the funding that comes from revenue-sharing. Revenue-sharing is 5% of the total state's general fund tax revenue. Revenues are then divided depending upon your community's valuation and population. In 2010, the state's total for revenue-sharing is $93 million, down almost $40 million from 2008 due to the economy.
In 2010, the City of Portland will lose approximately $2.4 million in revenue-sharing. This means fewer dollars in Portland for general assistance programs. Sadly, 2011 projected revenues are even lower, meaning even more cuts to Portland.
Maine State Employees
One of the most contentious pieces of the biennial budget is the pay reduction for all State employees. Many State employees residing in Portland contacted me to express their concern about the budget. The final proposal for State employees would require 20 shutdown days, no merit pay for the next two years, no longevity payments over the next two years, and require them to contribute to their health insurance, with the percentage of it based on their salaries. These steps will save Maine the aforementioned $34 million.
The Appropriations Committee worked with State employees on different options, and they chose this pay-reduction package. Everyone in the Legislature appreciates their willingness to work together to reach an agreement. In this budget, thanks to this cooperation, no State employee will lose his/her job.
Closing
Next Tuesday, we will begin the first votes on the biennial budget. I would really like to hear from you on the budget proposal, and I sincerely appreciate all the sacrifices our community has made. Please reply to this email and give me your thoughts. Thank you.
-Justin
