AUGUSTA, Maine — Maine has ended its budget year with revenues continuing to slump and a concern that the new budget year could be as tumultuous as the one just concluded.
“We will end the year in the black. We made sure of that with the legislation passed at the end of the session,” said Finance Commissioner Ryan Low.
The emergency legislation allowed some of the reserve funds that were allocated to the new two-year budget to be used to cover any revenue shortfall in June, meaning further cuts will be needed in the new budget cycle.
“Nothing we are seeing for June makes us think it will be any different than May,” Low said of state revenues. “I think it will be right in the same ballpark.”
In May, revenues were $21.2 million below projections made in April. To have the first month fall significantly below reprojection was worrisome, Low said.
Gov. John Baldacci said the revenues are a concern and he is taking steps to immediately hold down state spending in the new budget year. He will be signing executive orders today to continue current policies limiting hiring and travel.
“We are going to continue those practices,” he said. “We need to see what is happening with revenues during the summer, and we may need to do more to bring spending in line [with revenues.]”
Low said he is concerned whether two months of revenue below projection is a trend that will mean a large shortfall for the new budget year. He said while the numbers won’t be finished for a few days, there was “no good news” in the preliminary figures he has reviewed.
“After July revenues [are in] I hope we will have a better idea whether this is a trend or not,” Low said. “If it is a trend that we are looking at with revenues $10-to-$15 million a month below estimates through January, we will have to look at other options.”
Baldacci agreed and said he has many tools that can be used to further curtail spending if revenues continue to lag. He said he could not rule out a special session in the fall if there is broad agreement on cuts that can be adopted earlier than the second regular session of the Legislature in January.
Baldacci said he does not want to have to call lawmakers into a special session.
“The Appropriations Committee worked very well, in a bipartisan fashion, to develop the budget we have,” he said. “They are already planning to find $30 million as part of the budget for the second year and I think that is a good process to use.”
As part of the two-year budget, members of the Appropriations Committee rejected the governor’s proposal for an independent commission to find $30 million in ongoing savings. Instead they assigned themselves that task.
“We are going to have a very aggressive meeting schedule for the summer,” the co-chairman of the panel Sen. Bill Diamond, D-Windham, said. “I would toss out $50 million as a target; I think we are going to need to find more cuts than just the $30 million.”
Baldacci said the committee was “impressive” in its work to craft the two-year budget taking effect today. He said they are familiar with the budget and which areas can be explored for further cuts.
“We want to work with the committee to identify further cuts,” Baldacci said. “We are not going to solve this with a tax increase, that’s not going to happen.”
Low said the rainy weather in June may pose problems with the analysis of state revenues. He said weather affects tourism, which has a major impact on state revenues in the summer months.
“I am hoping the sun comes out,” Baldacci said.