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This is Governor John Baldacci.

This week the Legislature and I worked to finalize the details of changes to Maine’s current budget.

The process was necessary because the State – caught in a national economic downturn – was spending more money than the tax resources coming in.

A $190 million shortfall had to be addressed.

Maine, like most states, must balance its budget annually. We don’t have printing presses like they do in Washington – we have to really make it happen.

When the national economy is faltering and federal cuts hit Maine, we either have to find additional tax resources to support critical programs, or we have to cut back.

A series of difficult choices confronted us in Augusta, and many Maine people offered their views to me and their Legislators about how we should approach this funding gap.

I appreciate the hard work of all of those involved through long and difficult debates.

The members of the House and Senate Leadership and the members of Appropriations in particular, did a tremendous amount of heavy lifting to craft a compromise that would pass the entire Legislature.

They also kept to important principles I outlined earlier this year when I developed a package of cuts that focused on reorganizing government in order to bring State spending in line with the tax resources that we had.

These principles were not to raise taxes on hardworking families and small businesses, not to raid the State’s rainy day fund and to find efficiencies in the way government does business and provide high quality services that Maine people deserve.

While these decisions were tough for all of us, we realized that if we are going to change the way we operate, building a government that we can afford and that continues to provide important quality services to our people - the Legislature enacted such a budget.

And I signed a compromise package that kept to my guiding principles.

There were real cuts in this budget, and you’re going to hear about those cuts, because they bring real pain. That’s why I put a proposal forward that shared the cuts among all departments and programs.

While some of the cuts I proposed to higher education and Medicaid were partially restored by the Legislature – and I appreciated being able to work with the Legislature to soften the edge of some of those cuts - a number of other reductions were included in the final budget.

A number of crucial restructuring and streamlining efforts made an additional reorganization of the Department of Health and Human Services necessary.

Combined with critical restructuring of the state Department of Education and local administration of education, we have tackled the two largest pieces of State spending, together accounting for a full 80% of the entire State budget.

These decisions have been difficult, but the end product is a reasonable and responsible budget that puts us on a firmer financial footing moving forward.

And that’s important, because we cannot predict when the national economy is going to rebound and we can’t ask hardworking families and businesses that employ people to shoulder more of a load when they’re having a hard time as it is, right now.

High energy prices that continuing to go sky-high, struggling to balance their bills and pay their people.

Families are under a lot of real economic insecurity right now and it’s not a question of “if” we are in a recession when people are gripped by anxiety.

Given the continuing housing crisis, credit crunch, war overseas and energy costs, we have got to be prepared for additional tough times. This budget helps us do that.

Our job doesn’t end with this budget. It’s imperative that we continue to reduce administrative inefficiencies in education, in corrections and streamline government at all levels.

We are all there to serve the same people. We have to do a better job working together and we have got to have fewer people to do it. And we know that’s what the future necessitates if we’re going to provide high quality health care, educational opportunities, economic development and protect our natural resources.

Given the challenges of the slowdown in the national economy, I’m proud that the Legislature was able to come forward again and work with me and my Administration to produce a budget that recognizes shared responsibility.

Not only are we addressing the short-term problem, but we are putting ourselves on a path of sustainability in the future – so that we are prioritizing spending and making sure that we have the funds to be invested in job growth and economic development.

Thank you very much.

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