Maine state budget (2010-2011)

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Maine operates on a biennial budget schedule, with the FY 2010-2011 biennial budget totaling $5.6 billion.[1] The state announced on July 20, 2010, that it ended Fiscal Year 2010 with a surplus of more than $70 million.[2] Gov. John Baldacci said that the surplus resulted from higher-than-expected revenues from corporate income and sales and use taxes, and also from limiting spending by state agencies. State law required the surplus to be allocated to a number of state funds, including the rainy day fund, the Finance Authority of Maine's Loan Insurance Reserve Fund, the General Fund's operating capital and the state retirement system and retiree health fund.[2]

For the coming fiscal year, however, the state faces a shortfall of almost $1 billion.[3]

Going into the fiscal year Maine had a total state debt of $9,972,282,018 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[4]

2011 State spending & deficit in billions[5]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$8.9 $0.8 $3.4 $1.1 $1.2 $0.4 $0.6 $6.1
2011 Local spending & deficit in billions[5]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$5.7 $0 $0.1 $2.1 $0.2 $0.4 $0.40 $3.5

Fiscal Years 2010-11

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.[6]

The state's two-year budget for FY2010-11 totalled $5.6 billion.[1] Lawmakers anticipated $85 million in federal Medicaid funds, but the state received only $76 million.[1] The state saw $70 million more in revenue than projected, and the majority of those funds were required by law to go into the state's rainy day fund.[1]

Maine ended FY2011 with a surplus of $48.9 million, 1.7 percent over the projected figure.[7]

In March 2011, Gov. LePage said he would introduce another supplemental budget bill due to a shortfall in MaineCare that was, in part, the result of a ruling by federal judge that the state had to reimburse $30 million that they overcharged the federal government.[8]

The state announced on July 20, 2010, that it ended Fiscal Year 2010 with a surplus of more than $70 million.[2] Then Gov. John Baldacci said that the surplus resulted from higher-than-expected revenues from corporate income and sales and use taxes, and also from limiting spending by state agencies. State law required the surplus to be allocated to a number of state funds, including the rainy day fund, the Finance Authority of Maine's Loan Insurance Reserve Fund, the General Fund's operating capital and the state retirement system and retiree health fund.[2]


Budget cuts

In Oct. 2010 Gov. Baldacci ordered $10 million in budget cuts which he said were necessary because the state received less federal funding than it had budgeted for and the economic uncertainty.[1] Legislators on both sides of the aisle said that they supported the governor's action.[1]

The cuts included eliminating $5.6 million from the Department of Health and Human Services budget, $1.4 million in the state treasurer's office and about $1.2 million in spending freezes through the Department of Administrative and Financial Services.[1] Although the governor did reduce funds for the Department of Education, lawmakers said that they expected cuts to come in the future.[1]

The governor ordered the budget cuts despite the fact that the state's revenues the first few months of FY2011 were approximately $22.5 million over projections.[1] The Maine Revenue Services explained that the revenue figure could had been due to the timing of payments and not an actual increase.[1]

Passage of Budget

For FY 2011, Maine was facing an expected $438 million budget gap.[9] At the time the state's budget was passed, the gap was $310 million, less than originally predicted due to increased federal funding and optimistic economic predictions.[10]

On March 30, 2010, the Maine State Legislature approved the state's supplemental $5.7 billion two-year budget[11], which closed a $310 million gap between revenues and expenses.[12] The Senate voted to approve it by 110-35, and the Senate tally was 31-2.[12] The budget included cuts to social programs such as MaineCare, revenue sharing and school subsidies that legislative leaders called painful, but the budget also included no general tax or fee increases.[12]

Gov. John Baldacci signed the bill on April 1, 2010.[13]

Rep. Sawin Millett, the ranking Republican on the Appropriations Committee, worried that the budget's reliance on one-time money would mean more cuts for the next two-year cycle.[11] He said that the then current budget would leave the state with a structural gap that would exceed $1 billion in the future.[11] The budget bill cut $47 million from theDepartment of Education and $22 million from the Department of Health Human Services.[12] Other measures in the budget included higher education cuts amounting to nearly $8 million and revenue sharing reductions amounting to $16 million.[12] The cuts to the Maine school system would help make up for the $100 million of derailed federal funding.[14]

Other highlights of the FY2011 Budget[11]:

  • Reduced fees for vital records by providing general funds to cover the lost revenue. Fees for birth and death certificates lowered from $60 per copy to $15.
  • Set up two initiatives to encourage delinquent taxpayers to pay outstanding balances through programs set to run from September through November.
  • The State Planning Office was required to come up with a plan by Nov. 30 to reorganize and save $225,000. The general fund portion of the office’s budget was $2 million.
  • The State Liquor and Lottery Commission were to enter into an agreement to offer the new lottery game Mega Millions.
  • The Department of Conservation to install “iron rangers” – fee collection boxes – in certain unstaffed areas of state parks and historic sites.
  • A work group to study the delivery of mental health and substance abuse outpatient services would be established.
  • The state librarian required designate a nonprofit organization to provide private support for the library.
  • The budget provides $3.5 million to pay for the state’s share of disaster assistance dating back to flooding in 2005.

Expenditures 2010-11 Biennial General Fund Budget[15]

Category Amount
K-12 Education $2,433,577,775
Healthcare-Medicaid $1,203,267,461
Public Safety, Justice and Law Enforcement $581,606,666
Economic Development $75,529,848
Healthcare: Non-Medicaid $685,144,869
Higher Education $544,262,787
Debt Service $244,154,949
Property Tax Relief $70,103,958
Other $104,395,230
Natural Resource Management $147,723,172
Legislature $59,323,475
Arts and Humanities $17,568,312

Budget figures

Maine's top 2 sources of revenue were Individual Income Taxes (43.4% for the 2010-2011 biennium) and Sales & Use Taxes (32.3% for the 2010-2011 biennium).[16]

Maine's shortfalls:[17]

FY 2009 FY 2010 FY 2011
$129 million $196 million $244 million

Maine's General Fund Revenues in billions (estimated FY 2010-2013):[18]

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
$3.09 $2.83 $2.78 $2.77 $2.87 $2.97

However, even though the state budget was looking at $438 million gap, some agencies, the Maine Transportation Authority saw an increase to their operating budget. The MTA's budget had increased 82.5 percent since 1997.[19]

Pensions

The state retirement system needed an additional $287 million in the next budget cycle compared with the FY 2011 state budget to keep it in the black.[20] Maine Public Employees Retirement System executive director, Sandy Matheson, said that the system would need approximately $448 million in 2012 and $468 million in 2013, for a total of $916 million for the FY2012-13 budget cycle, compared with the FY 2010-2011 cost of $629 million. The fund lost nearly 19% in FY2009 and had gained 11% as of June 2010. The state was required to pay off all the debt by 2028.[20][21]

One of every 10 taxpayer dollars went toward state employee and teacher pension funds, and the Maine Center for Public Interest Reporting predicted at the time that within five to six years pension costs could account for 20% of the budget.[22][23] The state owed the retirement system $4,432,000,000, to be repaid by 2018 in accordance with the state constitution.[23][24]

Transparency

See also: Evaluation of Maine state website

Government tools

The following table was helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
None n/a n/a n/a n/a n/a n/a
  • The Maine Arts Commission had made a list of grants available.[25][26]

Budget background

See also:Maine state budget

On or before September 1st of even-numbered years, the judicial branch, the legislative branch and each executive branch department or agency prepare a budget request for the next two fiscal years. The most important restriction on the Legislature in enacting a budget was the Maine Constitution’s guarantee that the State’s budget would be balanced in each fiscal year of the biennium which results from its prohibition on deficit financing. There were two sections in the State Constitution which address the issue. Article IX Section 14 prohibits the State from incurring long-term debt of more than $2,000,000, except for certain specified emergencies, without a vote of the people. In addition, Article V, Part Third, Section 5 prohibits the use of proceeds from the sale of bonds for current expenditures.[27]

The Consensus Economic Forecasting Commission (CEFC) was originally established by Executive Order on May 25, 1992, in order to provide the Governor, the Legislature and the Revenue Forecasting Committee with analyses, findings and recommendations for state economic assumptions to be used in developing state revenue forecasts. Creation of the commission was in response to a recommendation of the Special Commission on Government Restructuring in 1991 to establish an independent, consensus process for state economic and revenue forecasting. Public Law 1995, chapter 368 enacted in statute the Consensus Economic Forecasting Commission, maintaining both the structure and intent of the original Executive Order.[28]

The CEFC was required to develop two year and four year economic forecasts for the State of Maine. In performing this duty, the commission was required by statute to meet twice each fiscal year. No later than November 1st and February 1st annually the commission must develop its findings with regard to the economic assumptions or adjustments to the existing economic assumptions for the State of Maine. The commission submits its findings to the Governor, the Legislative Council, the Revenue Forecasting Committee and the Joint Standing Committee of the Legislature having jurisdiction over appropriations and financial affairs. The Revenue Forecasting Committee is required to use the economic assumptions and forecast of the commission in developing its four-year revenue projections.[29]

Accounting principles

See also:Maine government accounting principles

Maine's audit reports were published online by the Department of Audit. The Maine Department of Audit's primary responsibility was to audit the financial statements of the State of Maine and expenditures of federal programs. Neria R. Douglass had been State Auditor since 2005. The Auditor’s statutory authority were under Title 5, Chapter 11 of Maine’s Revised Statutes.[30][31][32]

The Institute for Truth in Accounting (IFTA) rates Maine “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Maine’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[33] Maine's CAFRs were published online by the Office of State Controller. Edward A. Karass was the State Controller of Maine.[34][35]

There was one aspect of accounting that needs to be looked at very closely. With the assertion of "Net" assets shown substantial "Advance forward liability funds" that for all intents and purposes were truly an asset would be masked as a "Liability" removed from the showing of net assets. EXAMPLE: If MTA had a liability fund "designated" for future development / maintenance / acquisition and all payments into this fund over the years was designated as a line item liability payment, in one respect those payments into the fund draws down the MTA's year by year operating funds in effect possibly creating an operating budget shortfall (in effect a profit was transformed into a liability with those payments) and the standing balance of the fund which could exceed a billion-dollars was not reflected as an asset having been designated a "liability." The way to pick up on a fund of this nature was by careful scrutiny of the "Notes to the Financial Section" of MTA's CAFR or the "Notes to the Financial Section" of the State CAFR.[36][35]


Economic stimulus transparency

Maine would receive approximately $127 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[37] Maine would receive an estimated $683,807,294[38][39]

As of August 200, 40% of stimulus funds for transportation projects went to Pike Industries, who received $48.5 million of the nearly $121.3 million given to the Maine Department of Transportation.[40] The largest part of the contract was for the I-295 corridor which cost $31.2 million.[40] Pike Industries was the only company to had a lobbyist in Augusta. The lobbyist spent $18,500 on lobbying efforts in 2009 and an additional $11,000 during the first four months the legislature was in session in 2010.[40]

Six Maine agencies would also collectively receive $7 million to weatherize the state’s old housing stock.[41][42]

  • Maine established an economic recovery website to show how legislators and government officials in Maine were spending Federal funds.[43]

Independent transparency sites

The Maine Heritage Policy Center created a website that provides transparency information for citizens.[44]

Public employee salary information

Main article: Maine state government salary

MaineOpenGov.org provides state salary information. Users can search by first name, last name, agency, department, subdepartment, position, pay year, and wage range.[45]

A study by the Institute for Truth in Accounting had said that Maine taxpayers had lost on average $3,000 in 2010 because of investment losses at PERS.[46]

See also

External links

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 The Portland Press Herald "Federal funds fall, so budget gets cut" Oct. 2, 2010
  2. 2.0 2.1 2.2 2.3 "State sees $70M surplus for '10 budget" July 21, 2010
  3. The Bostone Globe "No new taxes, say Maine candidates" Sept. 13, 2010
  4. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  5. 5.0 5.1 USA Spending, State Guesstimated* Government Spending
  6. FY2011 CAFR
  7. WMTW.com "Maine Ends Fiscal '11 Nearly $50 M In Black" July 27, 2011
  8. The Republic "Maine governor to submit another supplemental budget to eliminate shortfall" March 28, 2011
  9. Bangor Daily News, "Gov. Baldacci defines goals for final year," January 2, 2010
  10. MyfoxMaine.com "Maine House, Senate Pass State Budget" April 1, 2010
  11. 11.0 11.1 11.2 11.3 The Portland Press Herald "Budget to erase state shortfall wins approval" March 31, 2010
  12. 12.0 12.1 12.2 12.3 12.4 Business Week "Maine lawmakers enact budget rewrite" March 31, 2010
  13. Forbes.com "Maine Governor signs bill slashing state budget" April 1, 2010 (dead link)
  14. Maine Watchdog, Derailed FMAP May Trigger Education Cuts, June 31, 2010
  15. Budget at Glance (dead link)
  16. Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  17. Gov. Baldacci's Office, "Budget Table and Chart," May 1, 2009
  18. Gov. Baldacci's Office, "Budget Table and Chart," May 1, 2009
  19. Maine Watchdog, MTA Budget Up 82.5% Since ’97 Despite Payroll Reductions, Sept 22, 2010
  20. 20.0 20.1 [=Article$0@46585;Article MaineBiz Daily "State tackles budget, retirement system debt" July 9, 2010]
  21. Maine Public Employees Retirement System
  22. The Lewiston Sun Journal "Pensions to eat up larger share of state budget" July 28, 2010
  23. 23.0 23.1 Maine Center for Public Interest Reporting "Looming bill for pensions would command larger share of taxes paid to state" Last visited July 28, 2010
  24. [pinetreewatchdog.org Maine Center for Public Interest Reporting]
  25. Maine Arts Commission
  26. Maine Arts Commission Grants
  27. Maine State Legislature, "Budget Process," accessed October 24, 2009
  28. Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  29. Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  30. Department of Audit Web site, accessed October 24, 2009
  31. Maine’s audit reports
  32. Title 5, Chapter 11
  33. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  34. Office of State Controller Web site, accessed October 24, 2009 (dead link)
  35. 35.0 35.1 CAFRs (dead link)
  36. Maine Turnpike Authority 2010 CAFR (dead link)
  37. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  38. [1]
  39. H.R. 1586
  40. 40.0 40.1 40.2 Maine Watchdog, Pike Industries Receives Large Share of Stimulus in Maine, Aug. 17, 2010
  41. Maine Watchdog, 6 Maine Agencies Receive Weatherization Funds, Aug 20, 2010
  42. Kennebc Journal, Maine getting more weatherization money, Aug. 20, 2010 (dead link)
  43. Maine Recovery 2009
  44. www.maineopengov.org,
  45. Maineopengov.org
  46. Maine Watchdog, Taxpayers Lose $3,000 Each, June 30, 2010