🔒Capitol update: A rundown of Maine’s money maneuvers

Budget guesswork

• Specter of federal cuts chills decisions
• Funding formulae up in the air

The required analysis by the Bureau of the Budget regarding its projected structural budget gap of $756 million is just one of the worries Finance Commissioner Sawin Millett has as he and Gov. Paul LePage work on the next two-year budget.

"We are very worried about what Congress does with the taxes expiring at the end of the year and with sequestration," said Millett.

If Congress does not act to extend current federal income tax rates, credits, exemptions and deductions set to expire Dec. 31, Mainers will see a huge tax increase of an estimated $1.4 billion in 2013. That will shrink state revenues and slow the state's economy, depending on what action Congress takes.

Millett is also worried about the across-the-board cuts called "sequestration" that will start Jan.1 if Congress does not act. He said it could mean hundreds of millions of dollars in lost federal funds, depending on how Congress modifies the cuts to address the federal deficit.

He said in budget meetings with his Cabinet, LePage told members they should know legal obligations for programs if federal funds shrink.

"We may have to make some decisions that we can't afford to backfill when the federal cuts come," Millett said.

The budget gap identified by the state budget office assumes continuation of current spending levels based on what is in state law.

For example, the law requires the state to pay 55% of local public education, but it has never met that 2004 law. The state now funds about 45% of local school costs. Funding schools at the 55% level would create a $253 million hole.

Municipal revenue sharing has also been affected by budget cuts. Cities and towns are supposed to get 5.1% of sales and income tax revenues. In the current budget, that was reduced to 3.5%. If revenue sharing stays at the 3.5% level, it reduces the gap by $95.8 million over the two years of the budget.

Democrats argue most of the gap comes from tax cuts passed at LePage's insistence that are expected to reduce revenue by $342 million. Republicans argue that the package which lowers the top income tax rate from 8.5% to 7.95% and eliminates income taxes for about 70,000 Mainers will help boost the economy and actually generate additional state revenue.

Millett said while every budget is a work in progress, all of the uncertainty at the federal level will make this two-year budget even more fluid.

LePage: Trustees offer not good enough

• Tuition freezes only go so far
• Administrative review under way

Gov. Paul LePage says the University of Maine Trustees are on the right track in freezing in-state tuition for two years, but they will have to do better to get his support for maintaining state appropriations at the current $176 million a year.

"They have got to show me a heck of a lot more than just freezing tuition," he said in an interview. "They've got to show me they are moving in the right direction."

LePage said the university system needs to do more to attract out-of-state students and reduce administrative costs. But he also had praise for the system's participation in his recent trade mission to China, which he described as "a very solid move in the right direction."

LePage said he would propose a counteroffer to the trustees to support level funding "and maybe a little bit more" if they would freeze tuition for four years. The board voted to freeze tuition at current levels for two years if the state maintains its current appropriation. Ryan Low, director of governmental and external affairs for the university system, said the governor's proposal is in line with the thinking of the board and Chancellor James Page.

"The trustees are very concerned about controlling the cost of tuition," he said, noting the chancellor has undertaken a university-wide review of administrative costs and the university's structure.

Low said last year the trustees froze tuition rates, so combined with the current proposal, tuition would be held at the same rates for three years. He said the freeze also applies to fees, which can be substantial.

"We have not had the chance to come in yet with a budget one-on-one with the governor to discuss our budget," he said. "We look forward to talking with the governor about his idea."

Chief Justice wants more money

• Security improvements needed
• Electronic filing system requested

Maine Chief Justice Leigh Saufley is asking the governor and Legislature to bolster court security and start a five or more year process to develop electronic filing of court papers, an $8.2 million increase in the next two-year budget.

"Courtroom security has to be our top priority," Saufley said in an interview. "The reality for safety is you need people. You simply must have the right people in the right place to assure there are no guns brought into the courthouse."

She said budget increases over the last few years have increased security so that about half the courts have adequate coverage. She said the 63 positions in the marshal's office would be bolstered by 35 additional marshals and five more sergeants under her proposal.

"The marshals are finding that people still forget and have weapons in their pockets," Saufley said. "On a not irregular basis, we have people who remember not to bring a gun in, but have ammunition in their pockets."

She said the marshals continue to find knives on individuals coming to court and she is "amazed" at the number of individuals caught trying to bring in illegal substances.

The security issue has long had the support of lawmakers on the Legislature's Judiciary Committee. Sen. David Hastings, R-Fryeburg, the co-chair of the panel, said court security is a major concern that needs to be addressed.

"I know it is expensive," he said, "but … the first time we have an incident where someone does brings a gun into a courtroom and actually discharges it, we will wish we had done this years before."

Hastings said lawmakers have been adding security funding "in bits and pieces" over the last few years, but said it is time to provide security screening at every court. Rep. Charles Priest, D-Brunswick, the lead Democrat on the committee, agrees.

"The judiciary committee has long advocated complete, 100% coverage," he said.

Saufley recognizes her request for an additional $4.9 million for security over two years will have to compete with a lot of other spending needs. Her second major initiative is to begin a process to implement electronic filing and document management for all the courts.

"We think that a rollout of electronic filing in Maine over a period of about five years will cost between $10 million and $15 million and then will pay for itself," Saufley said. She said the budget requests $3.25 million over the two years for an electronic document management system, which would provide a foundation on which to build an electronic filing system.

Priest said the courts are facing a serious storage problem if they continue to generate the huge amount of paper records that track court activities. He expects moving to electronic records will reduce storage costs and improve usability of the records.

Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz.