There has been a lot of talk about the last great budget crisis, which occurred in the early 1990's. I'm not so sure that things are that bad----yet!  One advantage Governor Baldacci has is that he is of the same party as the majorities in the State Senate and State House.  That was not the case in 1990 when Governor McKernan, a republican, had deal to deal with majority democrats in the legislature.  How bad was it in the 1990's?  Here's a quote from a January 1991 AP Story, "

Gov. John McKernan, asserting that he would "engage in one-man rule" for as long as the Legislature takes to tackle Maine's budget deficit, yesterday said his administration is drafting plans for unilaterally cutting spending and is rewriting rules to give state agencies more discretion in how they allocate their reduced funding.

"It's financial martial law he's declared, and the last time I checked this was a democracy," said Rep. Joseph Mayo, the House majority whip

In 1991 the budget grew by 0.0%, actually it deceased by about $400,000 dollars.  When you factor in inflation, the "real" appropriations (the value of the dollars when you account for inflation) there was a decrease of more than 5%.  In 1992, the budget in actual dollars decreased 0.3% or about 4 million dollars over the previous year. The only positive news that year, was the fact inflation dropped a few points, so the "real" budget decreased by "only" 3%. 

Fast forward to now, and consider the Governor's preliminary request for the 2009 budget, (The budget the state is already half way through -- right now!)  The Governor is asking for $150 million in cuts.  That's a five percent cut, without accounting for inflation.  So, if we had "financial martial law" in 1991, with a decrease of 400K, surely Armageddon is just around the corner with a 150 million dollar cut.

But wait, just like Fiscal Year 1991 was the beginning of several lean financial years, 2009 is likely to be just the start of several years of fiscal instability. The Consensus Economic Forecasting Commission (CEFC) has a straight forward review of the fiscal situation to date. By the way, the CEFC is an independent body that provides economic assumptions that the Legislature and the Governor use to build---or dismantle--- state budgets.

Unfortunately, this is just the beginning of the economic down turn.  Mike Allen, the chief analyst with Maine Revenue Service was quoted in the Bangor Daily News noting, "We are seeing the income taxes, the sales taxes and property values all go down in this downturn." That's a significant acknowledgement and a major difference from previous budget downturns, where only one of the major revenue sources took a hit.  

The only good news in all of this is that the Governor has been at the helm for six years and he has a strong team in place to help guide the Legislature through the storm.  It is also likely that leadership in both the House and Senate will appoint members to the Legislature's budget writing committee with solid experience. 

The great unraveling will occur when the rank and file hear about the cuts, look at the numbers and watch the faces of the endless parade of budget cut victims whom will appear within moments after the first budget reductions are announced.

A word of caution - the 2009 budget drama will be nothing more than a warm-up for the half billon dollar hole in the 2010-2011 biennial budget.