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Good morning. This is Governor John Baldacci.

As our thoughts begin to turn toward the holidays, we can lose sight of the challenges that Maine faces.

The effects of the worst economic crisis since the Great Depression continue to weigh on Maine.

State revenues have not met projections.

On Friday, I took action to cut State spending to ensure our budget remains balanced, as required under Maine law and the Constitution.

I ordered a curtailment of roughly $63 million dollars.

A curtailment order is a blunt instrument that allows the governor to cut spending immediately when revenues fall.

It’s a tool that helps us to keep our budget in balance.

I don’t take the order lightly, and I have considered its implications thoroughly.

But we must continue to cut State spending.

There is no option.

The working men and women of Maine cannot afford a tax increase.

And I will not support one.

At the same time, we must balance our budget, which means more cuts.

Last spring, working with Legislature, we passed a two-year budget that is $500 million dollars less than its predecessor budget.

That’s the first time in 35 years that a two-year budget has been less than the one before it.

We passed the budget with broad, bipartisan support.

We made tough cuts while maintaining our core values:

Protecting our most vulnerable;

Safeguarding public health and safety;

And investing in those areas that will help our economy grow once the effects of the national recession end.

Unfortunately, State revenues have continued to decline, and more cuts are necessary.

After the curtailment, the budget revisions I am going to submit to the Legislature in December will include more cuts.

We live in unprecedented times.

The difficult task of predicting how our economy will perform has gotten even harder.

Even the country’s leading corporations have difficulty predicting performance next month, let alone next year.

Like Maine, at least 42 states have had to make additional spending cuts after passing their budgets.

Even as the recession has begun to end on the national level, States continue to struggle.

In 2009, States had to close budget gaps of $72.7 billion dollars.

In 2010, the number is already $113 billion dollars – and growing.

In Maine, we have a history of austerity.

During the last six and a half years, Maine has reduced the size of State government.

We have 1,000 fewer State employees since I became Governor.

And we have made important changes to stretch dollars farther.

We’ve reduced administration throughout state government.

We’ve made major reductions in administrations in health and human services, information technology and finances.

We’ve eliminated and consolidated school administration.

And we’ve combined the oversight and operations of local jails and state prisons.

We’ve done all this – and much more – so we can focus resources on those places where they do the most good.

Government is leaner, more efficient and more effective.

But more must be done.

Following the will of the voters, Maine has also made a significant investment in K-12 education.

Since my first budget in 2003-2004, education funding has grown to almost a billion dollars this year, up from $709 million dollars back then.

And there are 19,000 fewer students.

Without those increases, General Fund spending today would be about at the same level as it was seven years ago.

It hasn’t been easy.

But we must continue the work to maintain a responsible State budget.

Friday’s curtailment will reduce funding in several areas.

Eighty percent of the General Fund goes to support health and human services and education.

As a result, curtailment hits those areas hardest.

But our universities and community colleges will also see reductions, as will nearly every department within State government.

It isn’t pretty, but it is necessary.

We’ve taken special care and evaluated each reduction based on several factors, including:

• Its effects on public health and safety;

• The extent an impact could be minimized;

• And, when possible, that the reduction followed the intent of the Legislature.

While the news is hard to hear, it’s important that school districts and other folks affected by the reductions know as soon as possible what to expect.

I’ve asked the Commissioner of Education to continue to work with the Legislature and local school districts to limit the impact on classrooms.

The days and weeks ahead are going to be difficult.

And I’m going to approach this budget process with an open mind and a commitment to protect the values we all hold dear.

We no longer have the option of saying no to uncomfortable ideas if they allow us to save money, become more efficient and protect important services.

But the people of Maine can respond to any challenge. They prove it every single day. And we also will be able to rise to this challenge.

And as we move forward, we will all have to work together for the greater good of the State.

I know we can do it.

Thank you and have a good weekend.

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