In response to the financial impact of the COVID-19 pandemic in Maine, state administrators are calling on agencies to prepare for 10 percent general fund reductions and 5 percent highway fund cuts for fiscal year 2021.
Kirsten LC Figueroa, the state’s top budget official, informed agency leaders of the plan in a recent email, the Bangor Daily News reported.
The economic fallout brought on by the coronavirus, which has resulted in mandated business closures and revenue declines throughout Maine, means the state is facing a projected budget hole of $524 million in the next fiscal year.
The 10 percent across-the-board spending cuts are expected to address that, but further cuts will also be necessary, as the deficit in the next two budget years (2022-23 biennium) could approach $1 billion.
The financial decline is steeper than the 2009 recession, after which Republicans were swept into office.
In a statement issued Aug. 6, Mills described the budget shortfalls as “significant,” the Portland Press Herald reported.
“While the steps we have already taken have protected Maine’s fiscal stability in the short-term, we still need to make difficult decisions in the months and years ahead,” Mills said.
While Democrats have suggested tax increases to make up for the shortfall, Republicans have said the administration has overspent.
Meanwhile, Mills has extended Maine’s state of civil emergency until Sept. 3, increasing the possibility that fewer dollars will be spent in tourist destinations before the summer season is over.
“Maine people have taken the tough but necessary steps to protect the health and safety of us all, and it is their actions that are allowing our economy to reopen in a gradual and safe manner,” Mills said in a news release. “But we cannot let our guard down. This deadly virus is still with us, and while I am proud of the progress Maine has made, we are not immune from the surges we have seen in other states. We must all stay vigilant and stay safe.”
State agencies are due to submit recommended budget cuts by Aug. 19.
