Business organizations brace for cuts
During one of the most difficult budget cycles the state has ever faced, the business community appears to be largely united in support of cuts proposed by the governor to business services and incentives. In the 564-page biennial budget proposed by Gov. John Baldacci for fiscal years 2010-2011, two items stand out to business advocates — the 10% reduction in the Business Equipment Tax Reimbursement program and a formula change to the corporate income tax. While both could cost companies and result in job losses, representatives of the Portland Regional Chamber of Commerce and the Maine State Chamber of Commerce say they won’t fight the proposed changes in Augusta.
Comparing this budget cycle to a similarly challenging one during the recession in the early 1990s, Chris Hall, senior vice president of government affairs at the Portland chamber, says “the business community is linking up with everybody else in Maine to feel some of the pain” in this tight budget year.
“We deeply appreciate the fact that it’s a budget so far that does not increase broad-based taxes,” says Dana Connors, president of the Maine State Chamber of Commerce. “I do want the Legislature to know that this does come with impact and it has negative consequences and we certainly will speak to that point” at the public hearings.
Meanwhile, the heads of business-related state agencies facing 10% budget cuts say, if the cuts are passed, services will by necessity suffer.
Janine Bisaillon-Cary, president of the public-private Maine International Trade Center, says the 10% state cuts (equaling roughly $58,000 annually from the center’s roughly $1 million budget) proposed to her agency in the next budget will mean she’ll have to reduce two full-time staff to part time and shift more responsibility to the remaining six full-timers. About half of the Maine International Trade Center’s annual budget depends on state money, and the remainder comes from private sector grants and revenue from membership dues and trade events. Cary says the cuts will affect trade center counselors’ ability to travel to Maine businesses to counsel them on entering the international trade market, and it is more challenging for her outreach staff to address the needs of companies with complicated international trade problems via e-mail or phone.
When asked if she plans to fight the proposed cuts in Augusta, Bisaillon-Cary chuckles. She expects to tell legislators that any cuts beyond the 10% would be unacceptable.
“I think we’re going to say that we can’t suffer any more,” she says. “We would suffer at a critical time when we’re getting more demand from the business community than ever before.”
Stimulus package, the great unknown
Proposed cuts to the Maine Technology Institute’s budget would shave $755,000 from its annual budget, leaving it at around $7 million in fiscal years 2010 and 2011. MTI President Betsy Biemann says the agency’s board is looking at how to find as much of the proposed cuts as possible from the agency’s net assets and operating costs, rather than cut into the millions in awards MTI grants annually to startup technology companies.
“We recognize that everyone’s got to tighten their belts and we’re looking at all the options,” she says.
Mark Delisle, state director of the Maine Small Business Development Centers, says the 10% proposed cut to the SBDC budget will mean 1.5 positions will be eliminated from his staff of 23, which he says has lately been swamped with calls from businesses looking for help navigating the recession. In fiscal years 2010 and 2011, SBDC’s budget could be set at $690,478, about $77,000 less than its current budget and $280,000 less than the agency’s budget in fiscal year 2008. Despite the sluggish economy, Delisle hopes to try to convince legislators to give more money to programs like his that support businesses.
“I’m hopeful that, as the Legislature starts to work out the budget, they look at the programs that generate revenue and try to preserve some of them,” says Delisle. “While I can understand the aspect of shared pain, I’m hoping the Legislature will be more strategic in terms of maintaining funding and increasing funding, because it’s all about jobs.”
Committee on Appropriations and Financial Affairs Co-chair Emily Cain (D-Orono) intends to push her committee to keep funding stable or even raise it for programs she believes will benefit the economy long term.
“I worry about underinvesting in key things that will move our economy forward — education, R&D,” says Cain. “A little bit more investment in the economy and economic development, a little bit higher investment in our research and development capacity and our higher education institutions would really go a long way.”
Cain is also keeping an eye on the $850 billion federal stimulus package, which at press time had passed in the U.S. House and awaited a vote in the Senate. The bill includes aid to states in several forms that would reduce stress on the state’s massive Dept. of Health and Human Services budget as well as promote construction and education. The federal contribution to Medicaid, which in Maine is known as MaineCare, would be increased by $87 billion, and the bill creates a $79 billion state fiscal stabilization fund that would disburse money in 2009 and 2010, according to the New York Times. The bill also includes over $30 billion for highway construction, and more than $140 billion for spending on education.
“We know how much we can afford but we don’t know how much money we’ll be getting,” says Cain. “We can’t really close our biennial budget without really knowing what’s in the stimulus.”
The Legislature begins considering the 2010-2011 biennial budget in earnest this month, and the first public hearing on the document is scheduled for Feb. 9. Nationally, Democrats hope to send a stimulus bill to President Obama by Feb. 13.
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