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This is Governor John Baldacci.

On Tuesday, I released details of my plan to balance the State budget for the rest of the fiscal year, which ends June 30, 2009.

These are difficult and harsh times.

The U.S. economy is in a deep recession. Most states are facing serious budget challenges, many on a scale far worse than Maine’s.

We must deal with declining revenues and an increased demand for government services.

In our budget deliberations, we have taken great care to safeguard core government functions and protect the health and safety of our citizens.

But we cannot account for $140 million dollars in reduced revenue without making difficult choices. There are no quick fixes or easy options.

My plan is prudent and responsible.

It cuts spending, but not recklessly.

It utilizes our reserves, but cautiously.

And it keeps an eye toward the future, and the uncertain national economy that we face.

For the current fiscal year, which ends June 30, we are facing a revenue decline of $140 million dollars.

In November, I took aggressive action to cut State spending by about $80 million dollars and also instituted a hard hiring freeze.

Those efforts have helped us to close the budget gap.

The Supplemental Budget I unveiled this week details our plans for dealing with the sharp decline in State revenues.

The budget I presented earlier this week continues the $80 million curtailment.

It also makes additional cuts in programs and services, including closing one housing unit at Charleston Correctional Facility.

The plan eliminates 94 positions, including 40 lay-offs.

State spending will be 2.1 percent, or $66 million, less in 2009 than it was in 2008.

And, under my plan, we will also use $45 million from the State’s reserve account.

The Legislature will reduce its own spending by $1.6 million. Democratic and Republican leaders understand the seriousness of the situation and have worked hard to be part of the solution.

This is the kind of responsible, bipartisan and forward-looking leadership we must have.

There are no new fees or fines.

The supplemental budget does not cut further K-12 education or higher education beyond the amounts included in the original curtailment.

As I considered the options for balancing the 2009 budget, my goal was to protect the public health and safety, and our economy.

It’s a difficult balancing act.

I made the best choices from a list of bad options.

As we get closer to June 30, our options for dealing with potential revenue declines will become more dangerous.

We are fortunate that we have restrained state spending for the past six years, and that we have begun the process of reducing the size of government and improving efficiency in building back our reserves from a negative $275 million to a positive $170 million.

And since taking office we have reduced the size of State government by 729 workers.

We have sought efficiencies in our school administrative districts, in our human services department and in corrections.

We have held spending in check and avoided broad-based tax increases.

We’ve also increased support for K-12 education and higher education, health care and land conservation.

And we’ve made critical investments that are paying dividends even during this difficult economy.

On January 9, I will present a two-year budget to the Legislature.

That budget must also account for declining revenues.

Revenues are projected to drop and additional dollars are required just to keep State government operating at this year’s level.

All told, we will have to close an estimated $838 million dollar budget gap.

It’s an enormous task and it is going to require the best from all of us.

But for now, our top priority must be to pass the supplemental budget with two-thirds support and put it into effect immediately.

So, I urge the Legislature to do its work quickly. Unfortunately, we are going to have more difficult challenges ahead.

But we also have great opportunities.

Maine’s industrial heyday was built on the foundations of cheap energy, harnessed from our rivers.

Industries were born, grew and thrived.

Today, we are on the verge of a new revolution in the production of energy, and Maine is at the forefront.

Just this week I awarded $4.9 million in the Riverfront Community Development Bond Program, grant funding to 14 Maine communities that is going to be able to leverage more than $41.7 million in private and public investments.

Businesses want to be here. Communities are laying the foundation for a bright future.

Optimism matters; negativity breeds decline; and our attitude – about ourselves and our home – sets the boundaries for what is possible. And a lot is possible in Maine.

I know that this is important news, and I also know that next week is another important week on another level. I want to wish the citizens of our State a Happy Hanukkah and a very Merry Christmas.

God bless and thank you.

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