Is Maine required to balance its budget, and how broad is the governor's power to cut spending mid-year when revenues fall short?

Plain-English summary

In June 2002, with the state facing a significant General Fund shortfall, Attorney General G. Steven Rowe sent the Governor, Senate President, and House Speaker an overview of the law governing Maine's balanced budget requirement and the governor's curtailment power. The memo functions as guidance for everyone in state government about how the rules work.

The AG made two main points. First, although Maine's Constitution has no clause that uses the words "balanced budget," the strict debt limits in Article IX, § 14 (which capped state-incurred debts and liabilities at $2 million absent a popular vote authorizing bonds) operate as the functional equivalent. The state has to live on its revenues, so the budgeting and appropriation statutes have to contemplate a balanced result. The AG quoted his predecessor's 1983 Opinion 83-8 for the same proposition.

Second, when revenues come up short, 5 M.R.S.A. § 1668 is the statutory pressure valve. Once the Commissioner of Administrative & Financial Services issues a written shortfall report, the governor "may temporarily curtail allotments equitably so that expenditures will not exceed the anticipated income and other available funds." The Superior Court in Butterfield v. Department of Human Services upheld an 80% curtailment of the Maine Child Care Voucher Program in 1991, treating § 1668 as a temporary fiscal management device that does not delegate legislative power unconstitutionally. Butterfield read "equitably" as permitting priority-setting choices rather than mandating uniform across-the-board cuts, and held that no program can be permanently terminated through curtailment.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Does the Maine Constitution explicitly require a balanced budget?

Not in those words. Article IX, § 14 sharply limits the state's ability to take on debt, which the AG (and Op. Atty. Gen. 83-8 before it) read as functionally requiring the state to operate on a cash basis. Combined with the budget statutes at 5 M.R.S.A. §§ 1663, 1664, and 1666, which contemplate revenues matching expenditures, the practical effect is a balanced budget requirement.

What is the $2 million debt cap in Art. IX, § 14?

The constitution prohibits the Legislature from creating debts or liabilities on behalf of the state that, singly or in the aggregate, exceed $2,000,000 at any one time, except to suppress insurrection, repel invasion, fund wars, or cover temporary loans repayable from taxation within the same fiscal year. Larger bond issues require approval by two-thirds of each house plus a majority of voters at a general or special election.

What is an "allotment" for purposes of § 1668?

Under 5 M.R.S.A. § 1582, appropriations are not available for expenditure until they are "allotted" through the work program process. Title 5, § 1667 requires agencies to spread their appropriations across the four quarters of the fiscal year, broken down by personal services, capital expenditures, and other expenses. The Governor, with the State Budget Officer, reviews and approves these work programs. The curtailment power operates on the quarterly allotments, not the underlying appropriation.

What did the Butterfield court actually decide?

Butterfield rejected five plaintiff challenges to an 80% curtailment of the Maine Child Care Voucher Program. The court held that § 1668 (i) is not an unconstitutional delegation of legislative power because curtailment is temporary and program-restoration belongs to the Legislature; (ii) is not an unconstitutional impoundment because the state must live within its revenues; (iii) requires "equitably" distributed cuts, but "equitably" does not mean "equally" across all programs; (iv) does not allow outright termination of any program; and (v) applies a deferential standard of judicial review because budget priority-setting is committed by the separation-of-powers doctrine to the elected branches.

Can the Legislature override a curtailment?

In effect, yes. Curtailment is temporary. As Butterfield put it, no program can be terminated by curtailment, and any cuts the governor makes can be promptly restored by the Legislature the next time it acts on appropriations.

Background and statutory framework

The AG attached and quoted from several sources: the curtailment statute itself, 5 M.R.S.A. § 1668; the appropriations-and-allotment framework at 5 M.R.S.A. §§ 1582, 1663, 1664, 1666, and 1667; the constitutional debt limit at Me. Const. art. IX, § 14; and the Superior Court's January 17, 1991 decision in Butterfield, written by Justice Alexander. The opinion also referred back to AG Opinion 83-8 (March 21, 1983), which had reached the same conclusion about the Maine Constitution's implicit balanced budget requirement.

As a Superior Court decision, Butterfield is persuasive rather than binding, but the overview memo treated it as the one judicial decision providing guidance on the interpretation and application of § 1668.

Citations

• Me. Const. art. IX, § 14 (debt limit functioning as balanced budget requirement)
• 5 M.R.S.A. § 1668 (governor's curtailment power)
• 5 M.R.S.A. § 1582 (appropriations available only after allotment)
• 5 M.R.S.A. § 1663 (scope of state budget)
• 5 M.R.S.A. § 1664 (budget must show balanced relation between expenditures and revenues)
• 5 M.R.S.A. § 1666 (budget based on estimated needs and anticipated income)
• 5 M.R.S.A. § 1667 (work program and quarterly allotments)
• Butterfield v. Department of Human Services, CV-91-29 (Kenn. Cty., Jan. 17, 1991)
• Op. Atty. Gen. 83-8 (March 21, 1983)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/2002/ag_20020618.pdf

Original opinion text

STATE OF MAINE
DEPARTMENT OF THE ATTORNEY GENERAL
6 State House Station
Augusta, Maine 04333-0006

G. Steven Rowe
Attorney General

June 18, 2002

Hon. Angus S. King, Jr.
Office of the Governor
1 State House Station
Augusta, Maine 04333

Hon. Richard A. Bennett
Office of the President of the Senate
3 State House Station
Augusta, Maine 04333

Hon. Michael V. Saxl
Office of the Speaker of the House of Representatives
2 State House Station
Augusta, Maine 04333

Dear Governor King, President Bennett, and Speaker Saxl:

I enclose a memorandum outlining the law governing Maine's balanced budget requirement and the Governor's power of curtailment of allotments. I hope this may be of assistance to you as you consider how best to deal with the substantial revenue shortfall our State is experiencing. If this Office can be of further assistance, please let me know.

Sincerely,

G. Steven Rowe
Attorney General

OVERVIEW OF THE LAW GOVERNING THE BALANCED BUDGET REQUIREMENT AND THE GOVERNOR'S CURTAILMENT POWER

Summary. The curtailment statute provides a short term mechanism to ensure that State government does not overspend its revenues in violation of the constitutional requirement that the budget be balanced, by authorizing the Governor to curtail allotments until the Legislature is able to take action to address revenue shortfalls. The statute has been upheld at the Superior Court level against constitutional challenge in a decision that affords substantial deference to the Governor in his exercise of the curtailment power.

The balanced budget requirement. The requirement that the State budget be balanced originates from the limits imposed on the state's indebtedness by Me. Const. Article IX, § 14. Section 14 prohibits the creation of debts or liabilities on behalf of the State which in the aggregate "at any one time, exceed two million dollars." As noted in Attorney General Opinion 83-8, this provision "guarantees that the State's budget will be balanced and precludes deficit financing." Op. Atty. Gen. 83-8, p. 2.

The Governor's authority to curtail allotments. Under 5 M.R.S.A. § 1668, the Commissioner of Administrative & Financial Services is required to report to the Governor "[w]henever it appears . . . that the anticipated income and other available funds of the State will not be sufficient to meet the expenditures authorized by the Legislature," and to send a copy of that report to the Senate President and Speaker of the House. After receiving the report, "the Governor may temporarily curtail allotments equitably so that expenditures will not exceed the anticipated income and other available funds." This language authorizes (though it does not require) the Governor to curtail allotments in order to bring budgeted expenditures into alignment with anticipated revenues and other income.

Statutory standards for exercise of the curtailment power. Section 1668 imposes two limitations on exercise of the curtailment power: allotment curtailments must be equitable, and no allotment may be terminated by curtailment. The statute also requires that curtailments "insofar as practicable, be made consistent with the intent of the Legislature in authorizing these expenditures."

There is one judicial decision providing guidance from the courts concerning the interpretation and application of § 1668, Butterfield v. Department of Human Services. In that case, the Superior Court upheld an 80% cut to the Maine Child Care Voucher Program which supported child care for children of low income parents who were working or pursuing further education; this cut was imposed by a curtailment order issued by then Governor John McKernan on December 31, 1990. The Court's opinion addressed a number of challenges to both the statute and its application to the Child Care Voucher Program.

a. In rejecting the constitutional claim of improper delegation of legislative power: "[I]t is important to recognize that § 1668 is hardly the statutory equivalent of a constitutional line item veto provision. It is, by its terms, a temporary fiscal management device. It permits the Governor to begin realignment of expenditures to meet reduced revenue projections only between the time when those reduced projections are recognized and the later time when the Legislature is able to act to bring projected revenues and authorized expenditures back into line. This legislation [§ 1668] recognizes that prompt action to curtail expenditures may be necessary once a shortfall of revenues is perceived. This allows the impact of reduced expenditures to be spread over the longest period of time, with consequent lesser disruption than if the same shortfall had to be accommodated in a very short time at the end of the fiscal year." Butterfield opinion, pp. 4-5.

b. On the Legislature's intent in enacting § 1668: "No program can be terminated as a result of this allotment curtailment process and, theoretically, any cuts which the Governor makes in expenditures can be promptly restored by the Legislature. Thus, § 1668 extends to the governor no authority to usurp or displace the Legislature's role in appropriating and expending funds, it simply provides a device to assure responsible fiscal management of revenue shortfalls on a temporary basis, pending legislative review and ultimate legislative control of the expenditure process. See Statement of Fact, Senate document No. S-526, 107th Legislature (1976); 1976 Maine Legislative Record pp. 971-972." Butterfield opinion, pp. 5-6.

c. On what is "equitable": "Because of the highly temporary nature of the expenditure curtailment authority which § 1668 extends to the Governor, the directive that such allotment curtailments be imposed 'equitably' is not so vague a standard as to render the statute unconstitutional. Essentially, this statute directs that program cuts must be fair, but need not necessarily be imposed equally by percentage. This recognizes the maxim that there is perhaps no greater unfairness than absolute equality mechanically imposed across a broad spectrum of persons or programs. The term 'equitably' implies making of choices rather than uniform, across the board equality such as would have been directed if the term 'equally' had been used. There is the protection, however, that these cuts 'equitably' imposed cannot be used as a subterfuge to absolutely terminate any program allotment." Butterfield opinion, p. 6.

d. In concluding that curtailment of the Child Care Voucher funds was not an unconstitutional impoundment: ". . . there is a constitutional mandate that regardless of amounts of funds appropriated, expenditures may not exceed revenues, as state borrowing authority is severely restricted, Me. Const. Art 9, § 14 . . . [A]uthority which has been provided in § 1668 is simply being utilized to assure, as the Constitution requires, that expenditures do not exceed revenues. Absent the existence of § 1668, it may well be that the executive would have responsibility, on finding no money in the till, to decline to make expenditures not covered by revenues. To do anything else would be violative of the constitutional duty of the executive not to expend funds in excess of revenues." Butterfield opinion, p. 7.

e. On the deferential standard of judicial review: "Where there are entitlements, they can be enforced. But policy choices are more appropriately committed to elected Executive and Legislative political leadership. Courts have only a limited and very deferential review of such choice making and priority setting. Here the court is being invited to supersede the Governor who has overall policy responsibility for all state programs and impose a choice regarding expenditure of a finite amount of funds based on a specific petition supported by a compelling policy argument. By the separation of powers doctrine, Art. III, of our Constitution, this choice-making is committed to the Legislature and the Governor."

What is an "allotment" for purposes of the curtailment statute. Title 5, § 1582 provides that appropriations do not become available for expenditure by state agencies until allotted upon the basis of the work program approved by the Governor. The work program procedure outlined in § 1667 essentially requires agencies to allot their appropriations and revenues to the four quarters of the fiscal year, classified by personal services, capital expenditures, and all other expenses. These agency proposals are reviewed by the Governor (with the assistance of the State Budget Officer), who may revise them before giving his approval.