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This is Governor John Baldacci.

We are in the midst of a national crisis, the likes of which have not been seen in a generation.

Our country is mired in a recession.

And we are all called upon to do our part to get through this difficult time.

On Friday, I released the details of my two-year biennial budget.

To balance it, we must prepare our State for recovery, requiring shared sacrifice now and a commitment to work together for the greater good.

We must account for an additional $330 million dollar decline in revenues caused by a weakened national economy on top of the existing gap of $508 million dollars, making the total deficit $838 million dollars.

The task is daunting and will require all of us – working together in a spirit of cooperation and bipartisanship – to find the best path forward.

The proposed budget will be $6.1 billion dollars, about $200 million dollars less than the previous budget.

According to records dating back to 1974, this will be the first time that a biennial budget has been smaller than its predecessor.

Despite the necessity of budget cuts, I have taken great care to safeguard core government responsibilities:

• Keeping police on the streets; • Maintaining the State’s ability to respond to emergencies; • Protecting vulnerable populations – our children, our elderly and our disabled; • And limiting, when possible, the ripple impacts of necessary spending reductions on Maine’s economy.

Make no mistake: Many of the proposals I have presented will have real impacts and will test our resolve.

There will be temptations to raise broad-based taxes to support important programs.

But raising the sales or income tax to support spending is not the right approach, especially during this deep recession.

Every part of State government and the programs and services it supports have a responsibility to share in the sacrifices imposed by this recession.

I know that State employees are already being asked to shoulder many of the impacts of constrained spending. But we must do more.

• This budget eliminates 219 positions, moving the number of State employees to the lowest level since at least 1983.

• State employees who earn more than $50,000 a year will be required to pay a portion of their health insurance costs.

• And we have also developed an early retirement incentive program that is designed to reduce State employment by $7.2 million a year.

• And the hiring freeze will continue.

I am also asking municipalities, businesses and individuals to do their part.

• We will reduce by 10 percent the Circuit Breaker Program, the BETR Program, the Maine Tree Growth Program and the State-municipal revenue sharing program.

• The only fee increases are in the Marine Resources, Inland Fisheries and Wildlife, and Conservation departments. And those fees will be used to partially offset the proposed cuts in frontline law enforcement.

• The total amount of those fees are $4.1 million dollars out of a $6.1 billion dollar budget.

• And we are seeking to authorize the Department of Corrections to transfer prisoners to facilities out of State.

I know that this proposal will be controversial, and will be met with opposition from many people I know and respect, including corrections officers who put their lives on the line.

The plan will help us though contain costs in one of the few areas of State government that will receive more money in this budget than in the last.

This two-year budget includes many difficult, but necessary choices.

It recognizes that regardless of our current circumstances though, we must keep an eye toward the future and invest in those areas that will create economic strength.

Even as we struggle to overcome this recession, we know we must invest in those things that will make our State stronger.

Our budget invests new money in childhood immunizations.

It maintains the Red Tide monitoring program, and protecting our important shellfishing industry.

And I am not cutting front line law enforcement - State Troopers, Game Wardens and Marine Patrol.

I have also worked hard to limit the effects of the recession on education.

In this two-year budget, funding for K-12 will be maintained in general purpose aid to education at $959 million dollars per year.

And we will reduce funding for higher education by 2.4 percent, a much smaller cut than was required of our universities and community colleges in 2009.

While these reductions will still require hard choices in communities around Maine, I recognize that a quality education is the cornerstone of our economy.

So we have put those limited resources behind our children. They’re our best investment and they’re the investment for the future.

Maine will be tested by this national economic crisis and other unforeseen challenges.

But our parents and grandparents suffered through the Depression and World Wars. They understood that tough times require sacrifice and ingenuity.

They made those tough choices and built a more prosperous world.

And we will do the same.

Thank you and God bless.

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