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Mills signs order to curtail revenue shortfalls amid pandemic

The $244,776,406 in total curtailment ordered by Mills goes into effect Thursday and will be made on a quarterly basis through the end of the 2021 fiscal year.
Credit: Getty Images/iStockphoto

AUGUSTA, Maine — On Thursday Governor Janet Mills signed a curtailment order to maintain budget stability amid projected revenue shortfalls caused by the coronavirus pandemic. In July, the non-partisan Revenue Forecasting Committee projected that the State of Maine would face a $528 million revenue shortfall in the General Fund for the biennium ending June 30, 2021 as a result of the COVID-19 pandemic.

The Executive Order, which adopts recommendations from the Department of Administrative and Financial Services, curtails allotments to the State’s General Fund by $221,775,584 and to the Highway Fund by $23,000,822. The $244,776,406 in total curtailment ordered by Mills goes into effect Thursday and will be made on a quarterly basis through the end of the fiscal year on June 30, 2021.

The Governor's Office says the curtailment order, which is a mechanism Maine governors can use to balance upended budgets when the State Legislature is adjourned, "avoids deep programmatic cuts" and will therefore protect Maine's safety net infrastructure, and preserve critical public health, safety, and education funding that Maine people rely on. The measure will also help the State avoid layoffs. 

The order will leave the State's "Rainy Day Fund" intact, which currently stands at $258.9 million. Prior to the release of the projected shortfalls, Mills worked with the Legislature to set aside more than $106 million in the General Fund.

RELATED: State projects $523.9 million revenue loss due to COVID-19

“While every state in the nation is facing significant challenges as a result of COVID-19, our actions today will ensure Maine’s fiscal stability in the short term and prevent significant impacts to the services that Maine people rely on,” Mills said in a release. “I urge Congress and the Administration in Washington to act immediately to provide additional aid to state and local governments so that we can continue to preserve critical services for Maine people and chart a full economic recovery.”

RELATED: Augusta to lay off city employees amid coronavirus

To fill the remaining $422 million shortfall in the General Fund, Mills directed the Department of Administrative and Financial Services (DAFS) to find solutions that minimize the impact on critical programs, such as GPA for education and critical State government personnel. DAFS presented its recommendations last week, which the Governor adopted on Thursday. 

The curtailment order:

  • Replaces approximately $97 million in State spending with one-time Federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Coronavirus Relief Funds for authorized public health and safety costs in line with updated guidance from the U.S. Treasury Department.
  • Adopts approximately $125 million in departmental cost savings and efficiencies. These departmental cost savings include funds from CARES Act’s higher Medicaid federal reimbursement rates (“FMAP”); federal grants awarded for departmental functions; and managing expenses by freezing many vacant positions; delayed technology updates; reduced spending on contracts; and canceling conferences, projects, and related travel.

Also included in Governor Mills’ curtailment is approximately $23 million in savings to address the shortfall in the Highway Fund. An additional $17 million of Highway Fund savings will be available upon Legislative approval.

In January 2021, also as part of the plan to balance the budget, the Governor will propose for Legislative approval an additional $130 million in General Fund departmental efficiencies utilizing improved FMAP and transferred appropriations from the FY20 General Fund. These transferred appropriations went unspent in part due to Mills’ mandate at the outset of the pandemic that allowed the State government to adopt frugality measures, which included the same style of freezes, delays, and cancelations.

Similarly, the Governor will request $70 million in proceeds generated by the State liquor operation to be moved from the Maine Municipal Bond Bank to the General Fund, including $50 million deposited in past years and $20 million anticipated in FY21.

Mills is discussing the order during Thursday's coronavirus briefing. Watch the briefing here: