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October 18, 2010 Capitol Update

Cracking down

By Mal Leary

Budget cuts on the way

  • Baldacci orders $10M curtailment
  • Schools escape unscathed

Gov. John Baldacci has used emergency powers given him last spring by the Legislature to curtail state spending this year by just over $10 million. Federal aid was not approved at expected levels and the state revenue outlook continues to be mixed.

But Baldacci has not cut appropriations for local schools or higher education. Previous budget curtailments have hit schools hard because they occurred in the midst of the school year, he said. But, Baldacci has warned schools that the budget he is preparing to recommend to the next governor and Legislature will hold school subsidies at current levels, not to the 55% required by state law. State subsidies to local schools currently make up just under 43% of school budgets.

“I have instructed the commissioner [of education] to make sure the message is conveyed to superintendents,” he said. “You have federal recovery act funds; you are not part of this curtailment, use those funds wisely.”

Finance Commissioner Ellen Schneiter said state revenues were under projections in July, but above projections in August with net revenue of $22.5 million. September revenues appear to be about on target, she said.

Most of the cuts in the curtailment order are in the Department of Health and Human Services, about $5.6 million. DHHS Commissioner Brenda Harvey said those cuts should not result in any actual reduction in services. “Most of these reductions are not service cuts at this point, “she said. “What we have done is tried to absorb in programs funding that would have otherwise perhaps have expanded or increased a program.” Most of the reduction at DHHS comes from $4 million in unused funds from the last budget year for foster care and adoption assistance. But several programs will also see cuts in relatively small amounts.

Another source of savings was identified last month by the Legislature’s appropriations committee. The state is borrowing money at record low rates to fund projects until bonds are sold, which will save about $1.4 million in lower interest payments.

State clamps down on contractor

  • Work on public safety radio network hits setbacks
  • Payments to Harris Corp. withheld

State officials have added penalty provisions to a contract for the construction of a $47 million statewide public safety radio network following concerns that the company hired to complete the project might not meet its October 2012 deadline.

A review of e-mails and other correspondence between the state and Harris Corp. of Melbourne, Fla., obtained under the state’s Freedom of Access Act indicates Harris and its subcontractors made mistakes and were behind schedule.

In an e-mail to Harris Vice President Michael Murray, Greg McNeal, the state’s chief information officer, wrote, “To say we are disappointed would be an understatement.” Murray then responded, saying, “I realize that we have some significant challenges in Maine, and desperately need to meet our commitments, so we can regain your confidence.”

The contract modifications establish benchmarks and allow the state to withhold payments to Harris until the standards are met. The most important benchmark is that the company obtains all of the licensed frequencies needed to establish the network, McNeal said, and his office is withholding 40% of the contract payments until it does so. That is in addition to the 10% already being withheld until the full project is completed.

Sen. Bill Diamond, D-Windham, co-chair of the Legislature’s appropriations committee, had expressed concerns about whether the terms of the contract could ever be met within the next two years. “We are not going to accept just throwing away $47 million to a company that is unable to meet its obligations, and we are not going to wait until the last day to find that out,” Diamond said. He has serious doubts about whether the company can obtain the necessary regulatory approvals.

Had officials not pursued the matter, Maine likely would have found itself in the midst of “another fiasco on a state computer system that the taxpayers have to pay for,” Diamond said. He was referring to a bill-paying computer system built for the Department of Health and Human Services that failed to work properly when it was turned on in 2005. That system cost nearly $60 million and was replaced with a new system that just started operating Sept. 1.

In an interview, Harris officials acknowledged that there had been problems with a subcontractor working to find some of the 302 new radio frequencies needed to build the system. But over the summer, additional Harris staff were assigned to the project and early this month the first batch of frequency requests were submitted to the Federal Communications Commission.

Delegation criticizes recess

  • Congress adjourns without appropriations bill
  • Pingree supports adjournment

Congress recessed a week earlier than planned for the election campaign break, but members of Maine’s congressional delegation say lawmakers should still be in Washington dealing with hundreds of unresolved issues.

“We should still be in session, no question,” said Sen. Olympia Snowe, R-Maine, the longest serving member of the delegation. “We have not passed a single appropriations bill, not a single one. There is no wonder why the Congress is held in such low esteem.”

Congress passed a continuing resolution that funds the federal government through the end of November. The new federal budget year started Oct. 1 and Congress does not return until Nov.15.

Sen. Susan Collins, R-Maine, who serves on the appropriations committee, said the panel had been working on various appropriations measures. “We had disagreements on spending levels but we had legislation ready for the floor but the Democratic leader never brought a single spending bill to the floor for consideration,” she said. “It is just inexcusable.”

Both senators voted against the adjournment order. But Maine’s two representatives split over whether to stay in session.

Rep. Chellie Pingree, D-Maine, voted for adjournment because she saw no reason to stay in session with House GOP members blocking votes on procedural matters.

Rep. Mike Michaud, D-Maine, voted against adjournment saying he told House leadership he would oppose ending the session without consideration of several key measures. Of the measures he wanted considered, only the currency manipulation bill was debated and passed.

The House adjournment motion nearly failed. House Speaker Nancy Pelosi, D-Calif., cast the tiebreaking vote after 39 Democrats joined with Republicans in voting against adjournment.

 

Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz. Read more of Mal’s columns here.

 

 

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