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Good day.

Last weekend I was in Washington for the winter meeting of the National Governors Association.

It was a productive weekend of meetings, and I was able to exchange ideas and listen and learn from other governors from every part of the country.

Two things are very clear from the trip: The national economic downturn is truly national. It’s taking its toll on states from coast to coast as diverse as California and New Hampshire.

There’s talk that gasoline prices could top $4 a gallon. I know that’s hard to imagine.

Families and businesses are already suffering from gasoline prices that have gone up about 20 cents in just the last two weeks. Diesel prices are even higher, and we’ve all felt the sting of home heating oil.

It’s no wonder that the national economy has slowed to a crawl and that prices are steadily climbing on everything from food to appliances. Just this week we learned that the producer prices have climbed more than 7 percent since last year – that’s the worst inflation since 1981.

The poor national economy is affecting families and businesses in Maine, and it’s also affecting state government and its operation.

The two-year State Budget depends upon certain revenues now that are not there, because the economy is not as robust as was expected or estimated for the budget when it was passed a year ago.

So we have got to tighten our belt. We have got to make changes so that we’re not burdening families and people and businesses in the State of Maine when they’re going through difficult times.

All told, Maine revenues have declined by about $190 million for the two-year budget of 2008 and 2009.

The situation demands action, and it demands leadership.

Already, I have submitted cuts for the budget that will close half of the budget gap without raising taxes and without draining our reserve accounts.

And next week I intend to submit further cuts that will balance the budget.

My legislation will not include tax increases.

As I said, people are struggling and businesses are struggling and families are struggling. Yet some folks are quick to look at a tax increase as a quick and easy fix, but it’s neither.

We must explore every option; look at every cut; make the tough decisions now.

If Maine’s spending is left unchanged, the budget problems we face this year will continue to grow next. The gap will get bigger and bigger, and the choices will be harder and harder.

That’s why we must restructure the way government operates at the state, county and local level.

The people of Maine have sent us to Augusta to lead and to do the hard things required of government in difficult economic times.

Yet despite the clear evidence, there are those still who are reluctant to change.

Some folks, who I am convinced are well-intentioned, would move us backwards on the important school reforms passed just last year.

The landmark school law will provide students with a better education, while eliminating unnecessary administrative duplication. And it will save taxpayers money.

We can’t go backwards. We need to change and we need real progress. To do so otherwise would be betraying tomorrow for the illusion of gain today.

We are also making real progress on our efforts to create a unified, statewide corrections system that will combine the best elements of our state and county systems.

Presently we have 16 different administrations of correction. This new, unified, statewide corrections systems approach will be much more beneficial both to the counties, where they are going to be housed, and to the State, but also to the taxpayers by making a better, more efficient correctional system.

It’s real progress, shows real cooperation and we’ve been able to approach it by working together. It’s something Mainers should be proud of.

I also know that my original proposal to set in motion a merging of Maine’s natural resources agencies ruffled a lot of feathers. But even there, we can point to some real gains.

Conversations have continued, and we are working toward a real evaluation of how best to provide services to Maine’s hunters and fisherman and farmers. And we won’t forget our natural heritage and the traditions that make Maine special.

As I have studied the changes that are required to bring Maine’s budget in balance, I don’t see lines of numbers. I see real faces and real people.

I understand the implications of what I am proposing. My decisions have not been made lightly or in haste.

We will not turn a cold shoulder to the desperate or the sick. And we will not forget about our less fortunate neighbors.

But we cannot continue on the same path, doing things the same way and expect different results.

We need to point ourselves to the future.

The challenges placed on Maine by a faltering national economy demand that we move today with an eye toward that future.

It’s not enough to act for the short-term. We must do what’s right and change for the long-term.

Thank you and have a nice weekend.

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