A state government hiring freeze and delayed upgrades to technology are among the proposals for curbing state spending in a plan released Wednesday by the Mills administration.

Gov. Janet Mills’ three-part plan would reduce spending by about $256 million but avoid deep program cuts and laying off state workers.

The plan also would use $97 million in federal funding for authorized public health and safety programs and transfer $70 million in increased state liquor sales tax receipts to the state’s general fund.

With the state and national economies soured by COVID-19 pandemic restrictions, state sales and income tax revenues are expected to decline by more than $520 million by the end of the current fiscal year, according to state economic forecasters. They predict the total revenue shortfall will be more than $1.4 billion over the next three years.

The state is in the second year of a nearly $8 billion, two-year budget and the financial picture will be gloomy going into the next two-year budget cycle as well. In early August, Mills ordered all state department and agency leaders to come up with proposals to reduce their spending in the current fiscal year, which ends June 30, by 10 percent.

The plan to curtail spending was released by Administrative and Financial Services Commissioner Kirsten Figueroa. Figueroa is the state’s top budget official, and her department oversees tax collections and pays state government workers, among other functions.

Kirsten Figueroa, commissioner of the Department of Administrative and Financial Services Russ Dillingham/Sun Journal

Mills will review the plan and then is expected to issue a curtailment order, one of the powers Maine governors have to keep the state budget from falling out of balance, a requirement of the state constitution.

“While every state in the nation is facing significant budget shortfalls caused by the pandemic, our early actions have protected Maine’s fiscal stability in the short term and prevented significant impacts to the services that Maine people rely on,” Mills said in a prepared statement. “I will closely evaluate Commissioner Figueroa’s recommendations to further stabilize the state’s budget, and I urge Congress to provide additional aid to state and local governments, along with flexibility for funding already awarded, so that we can continue to preserve critical services for Maine people and chart a full economic recovery.”

About $125 million in savings could be applied to the state’s current fiscal year, and federal CARES Act funding will also be used to offset allowable Medicaid costs, Figueroa said in a written statement. Also in the mix are hiring freezes for certain vacant government positions, delayed technology updates, reduced spending on existing or future contracts, and cancellation of conferences, projects and related travel, she said.

Another $130 million will come from revenues that went unspent in the previous fiscal year, which ended June 30. Figueroa credited Mills for reacting quickly to the pandemic’s economic impacts on state government by ordering departments to implement “frugality” measures in March, including hiring freezes, travel reductions and conference cancellations.

Sen. Cathy Breen, D-Falmouth, Senate chair of the Legislature’s budget-writing Appropriations and Financial Affairs Committee, said the state entered the pandemic on solid financial footing, which has allowed it to weather the current crisis with limited pain.

“It’s not as painful as it could be,” Breen said. “We have been fiscally prudent and I think this is proof positive of that.”

It appears that Mills’ plan would not require the Legislature to return for a special session to pass a supplemental budget this year, and that work could reasonably be delayed until January, when the next Legislature convenes, Breen said.

Republican budget committee members did not immediately respond to calls for comment.

Congress is gridlocked on another round of pandemic relief, with the Republican-controlled Senate proposing another $500 billion in aid, some of which would go to states. But the Democrat-controlled House wants more than $3.5 trillion in additional federal aid, including disbursements to state and local governments as well as to individual Americans and the unemployed.

Dean Staffieri, president of the Maine Service Employees Association, SEIU Local 1989, the union that represents the bulk of state employees, praised Mills and her administration for responsibly addressing the revenue shortfall.

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