Gov. John Baldacci last week signed a supplemental budget bill to close a $310 million deficit in Maine’s two-year biennium. The measure relied mostly on spending cuts, including $48 million from K-12 and $8 million from higher education through fiscal 2011.
“Democrats and Republicans came together during one of the most difficult economic times since the Great Depression,” Baldacci said in a press release. “State government will be smaller, we have made important structural changes that will reduce the cost of government going forward, and we will begin rebuilding our reserves.”
The gap that was closed is lower than the $438 million deficit projected in December when the governor first presented a budget-cutting plan in the face of weakening revenues. With the recession easing, revenue re-forecasts in March added a projected $51 million to state coffers.
Recent changes in rules on Medicare “clawbacks” reduced the deficit by $27 million. The lower gap projection also assumes a six-month extension of increased federal Medicaid reimbursement. The federal share was raised under the American Recovery and Reinvestment Act.
Under the revised budget, general fund spending is slated to be $2.85 billion in the current fiscal year and $2.7 billion in fiscal 2011. The budget revisions did not cut capital spending.