AUGUSTA, Maine — Regardless of the weather on inauguration day in January, Maine’s next governor will take the oath of office under a cloud of financial gloom.
It’s still too early to tell exactly how large a budget shortfall the next governor will inherit thanks to the recession and the fact that federal stimulus funding soon will dry up. Current estimates peg it at $1 billion, although some observers suggest the budget hole could run much deeper.
Further complicating matters, Maine state government’s current budget is already smaller than it was in fiscal year 2005 as legislators and Gov. John Baldacci have made cut after cut due to sagging tax revenues.
All five candidates for governor — Republican Paul LePage, Democrat Libby Mitchell, and independents Eliot Cutler, Shawn Moody and Kevin Scott — acknowledge that closing the budget gap will have to be a top priority of the next administration.
And all five pledge to focus on making state government leaner and more efficient without cutting the vital services that Mainers have come to expect and even depend upon for survival when times are hard.
But can it be done without raising taxes? Unanimously, the candidates say they have no plans to raise state taxes. But most also have declined to take a no-new-taxes pledge, arguing it would be disingenuous given the extreme financial uncertainty.
Nearly all of the candidates also acknowledge that in the immediate future at least, the state will continue to fall well short of its obligation to pay 55 percent of education costs.
That concession chops an estimated $240 million out of the $1 billion shortfall, but passes those costs on to school districts and, therefore, local property tax bills.
Following is a summary of each candidate’s plans for dealing with the $1 billion shortfall, some more specific than others.
Eliot Cutler
A Cape Elizabeth lawyer who served as associate director of the White House Office of Management and Budget during Jimmy Carter’s presidency, Cutler said he would implement a “zero-based budgeting” system.
Under such a system, every agency’s proposed budget is effectively built from scratch rather than being based on the previous budget. This forces agencies to justify and account for all spending, he said.
Cutler said he also would require a review of the billions of dollars in tax incentives, credits and other tax breaks offered by the state in order to assess whether they are beneficial.
“Right now, tax expenditures get enacted by the Legislature … and then they go on cruise control,” Cutler said. “They never get reviewed [again] by the Legislature.”
Focusing on the Department of Health and Human Services, Cutler said the agency must reduce the number of organizations — most of which are nonprofits — contracted to provide services. Cutler also wants to focus more on wellness and bring Maine’s Medicaid services in line with the national average.
In the area of education, Cutler has proposed merging the University of Maine System and the Maine Community College System to achieve administrative efficiencies and reduce duplication. He also supports public charter schools.
Cutler’s other cost-cutting proposals include:
- Creating an Office of Regulatory Review and Repeal to review state programs and recommend changes.
- Consolidating the state controller, state budget office and purchasing division into an Office of Financial Management.
- Eliminating the Board of Environmental Protection, replacing it with a three-judge appellate review system.
Paul LePage
LePage said that beginning Nov. 3, his transition team would conduct a full audit of every agency and program. The result would be a list of programs: some critical, others antiquated or unproductive, and still others that merit continuing if funding is available.
Like Cutler, LePage also supports using a “zero-based budget” system in which every year’s budget is built from scratch.
During recent rounds of budget cuts, legislators and Baldacci have reduced the scope or amount of many benefits provided by DHHS. LePage described programs for the elderly and mentally ill as “absolutely, unequivocally critical” but said he believes there are more savings within welfare areas of DHHS, which accounts for roughly 40 percent of the state’s budget.
“We believe there is a lot of fat in the system in the distribution of benefits,” LePage said.
The Waterville Republican said he would look elsewhere for examples of how to improve Maine’s government services in areas such as welfare and education.
“I’m looking around the country for programs that have worked very, very well in other states and seeing how we can adapt those to Maine to make them work well here,” LePage said.
Other LePage proposals include:
- Abolishing the Land Use Regulation Commission and returning its planning and licensing responsibilities to the counties.
- Requiring that state departments set and meet performance benchmarks.
- Overhauling Maine’s welfare programs, instituting a tiered system of benefits.
Libby Mitchell
As president of the Maine Senate, Mitchell played a key role in helping the Legislature’s budget-writing committee develop a bipartisan plan to cut roughly $1 billion from several spending plans. She said she would bring the same collaborative spirit to tackling the next $1 billion shortfall.
“The Maine Legislature passed five budgets in a bipartisan fashion, and we did not raise taxes,” the Vassalboro Democrat told a group of supporters in Belfast on Sunday.
Mitchell’s cost-cutting proposals include placing claw-back provisions in state contracts that would require contractors to return money to the state if they do not live up to their obligations to taxpayers.
She also has proposed consolidating the Department of Economic and Community Development and the State Planning Office into the Governor’s Office of Strategic Initiatives and Job Creation. While this would not result in huge savings, Mitchell said, it would reduce duplication and allow for more focus on creating the jobs needed to help the economy recover.
Speaking about the DHHS budget, Mitchell said she would protect the critical social services needed by the state’s elderly and disabled. But she said MaineCare could reduce costs in the longer term by focusing more on managed care that pays providers for preventive medicine.
Mitchell’s other priorities include:
- Implementing practices that require every department to eliminate duplication and practices that do not “contribute to the highest of service.”
- Increasing transparency and accountability by creating a searchable database of government spending and contracts.
Shawn Moody
The founder of a successful chain of vehicle collision-repair shops, Moody said he would bring cost-cutting tools and efficiency of the business world to Augusta.
“We need to go over to the state government side and implement the lean and green business practices that we have had success with in the private sector,” Moody said.
As an example, Moody often points to the fact that his family’s five repair facilities consolidated all of their back-office functions — such as human resources and accounting — at a single location. Moody said he believes the same thing could be implemented in Maine’s public education systems.
He also has proposed implementing a “surplus-sharing” program in which state employees or departments will receive bonuses for cost savings that they identify. The program would be similar to the employee profit-sharing program in place at Moody’s Collision Centers and other businesses.
State employees know best where the savings are, Moody said, so the key is providing them with additional incentive.
“People are very protective of their budgets, and they know that if you don’t spend it [this year], you don’t get it next year,” Moody said. “We have to change that behavior … and when you give people incentive to save, they will save.”
Other budget-cutting proposals by Moody include:
- Eliminating or leaving vacant positions when state employees retire, a practice used extensively during the recent budget cuts.
- Increasing transparency and accountability by posting all state expenditures online in an easy-to-read format.
Kevin Scott
Scott, who could not be reached for comment Sunday afternoon, also has proposed implementing initiatives from the private sector into state government.
Scott’s central proposal would allow state employees to switch to a 32-hour workweek in order to reduce payroll costs. Employees who opt for a 32-hour week will be allowed to keep their current benefits, including health insurance, vacation and participation in a pension plan.
An Andover resident who runs a recruiting firm for high-tech companies, Scott also has proposed instituting a pilot program known as “results-oriented work” in which employees are given an assignment but given freedom on how to complete that assignment, thereby encouraging creativity and problem solving.
On the issue of welfare, Scott said he would work with others — including recipients — to institute a “workfare” program.
He also has said he would institute a “top-to-bottom” audit of government agencies and programs to find redundancies and outdated programs.