Maine revenue shortfall increases

Posted April 28, 2009, at 7:45 p.m.

AUGUSTA, Maine (AP) — A state panel put the all-but-final decimal points on a new revenue forecast Tuesday, pegging a new budget shortfall from now through June 2011 at more than $570 million.

Officials and lawmakers already reviewing the governor’s $6.1 billion, two-year general fund budget had been put on notice that tax receipts were lagging and had prepared for the worst. Still, the Revenue Forecasting Committee report left them shaking their heads.

“I’m more at a loss than I was yesterday,” said Rep. John Martin, D-Eagle Lake, a former longtime House speaker who entered the Legislature in the 1960s.

Pending some final tweaking by the committee, Gov. John Baldacci’s administration is expected to put forth a response plan Friday.

“We’ve lost $1.1 billion in revenue in six months,” marveled Baldacci budget chief Ryan Low, as he recalled an earlier projection of general fund revenue that was revised to be smaller late last year.

With only two months left in the fiscal year, options for closing a fiscal 2009 gap of $129 million are limited.

Outright cuts or other program changes would not have much effect right away. But Low noted Tuesday that the state still has about $116 million in available reserves and that at least $20 million in federal aid could be applied to bridge the short-term gap.

The administration’s strategy on the two-year budget cycle that begins July 1 should become clear by week’s end.

Baldacci, as he has done since taking office in 2003, has sought to rule out broad tax increases — specifically on the sales and income taxes. He has championed a variety of governmental reorganization initiatives, though savings have been modest.

Now, the governor and legislative budget writers who are considering hundreds of millions of dollars in cuts, transfers and deferrals as well as minor tax and fee hikes are looking at a $444 million gap for fiscal 2010-11.

There is some sentiment within the Legislature’s Democratic majorities, particularly in the House, to look at taxes as a way to limit deeper spending cuts. Republican lawmakers have generally argued for long-range reductions in government spending, asserting that the impact of the economic recession will likely extend beyond 2011.

Baldacci, a Democrat, said in a weekend radio address that “the budget picture is difficult and is going to require choices that all of us would prefer to avoid.”

“But,” he added, “we are not in a hopeless situation, and we will overcome the obstacles in front of us.”

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