‘Best guesses’ on budget vex state legislators

Posted Dec. 13, 2009, at 9:26 p.m.

AUGUSTA, Maine — Gov. John Baldacci this week will submit a budget calling for more than $400 million in cuts and spending shifts based on assumptions Congress will pass an additional stimulus plan and extend federal aid to the states.

Those assumptions worry lawmakers who are charged with bringing the state budget into balance.

“For any state, including Maine, to put dependence on what Congress may or may not do is futile, silly and foolish,” Sen. Bill Diamond, D-Windham said. He is the co-chairman of the Legislature’s Appropriations Committee. “What we will have to do is face what we know is before us and address that and realize we may have more to do.”

The quandary facing lawmakers is that the state process for forecasting revenues is based in state law. The state’s Consensus Economic Forecasting Commission findings are the basis for the work of the revenue forecasting committee, and the economic forecast is based on the assumption Congress will pass another $200 billion in stimulus programs and provide additional direct aid to the states through picking up a greater share of the cost of the Medicaid program.

“That’s a political assumption,” said Sen. Richard Rosen, R-Bucksport, the GOP senator on the panel. “And there are economic assumptions they have made, and that is what we will have to deal with.”

He views the economic and revenue forecasts as “best guesses,” and while he hopes they hold, he would not be surprised if revenues continue to slip. He said the panel may well have to deal with further revenue shortfalls in 2010.

“I think [Finance] Commissioner [Ryan] Low made the point to the committee that in the last year, we have seen revenues reforecast down three times,” Rosen said, “and I believe he said that totaled $1.1 billion.”

Last April revenues were re-forecast only to miss the mark in its first month by $21.2 million, Rosen said. So far in the budget year that started July 1, revenues are $66.7 million below estimates.

The revenue forecast panel reprojected revenues down by $383 million over the rest of the two-year budget at their meeting last month. They are scheduled to meet again this winter before the Legislature completes action on the proposed budget changes.

Gov. John Baldacci said he shares the frustration of committee members. He said state law sets up the process to project revenues, and he has to propose a budget within the projected revenue as established by that process.

“We have to deal with what is before us, the process we have,” he said. Having served eight years in Congress, he said any assumptions based on what it may or may not vote for is questionable.

“It seems like you can never close a budget because you are always facing another revenue’s downward forecast,” Baldacci said. “But those are the times we live in.”

Rep. Emily Cain, D-Orono, co-chairwoman of the committee, said the revenue forecast report is full of statements that add up to an admission the forecast is a guess.

“They really don’t know, going forward, what the situation will be,” she said. “No matter what happens in Congress, I think we will be looking at revised numbers in 2010.”

Cain said the committee understands the budget they craft to meet the currently identified shortfall in state revenues may not be the last budget they have to write. She said finding more than $400 million in cuts will be very difficult, but committee members realize they may have to cut further.

“I realize that may not be well understood outside of this room,” she said in an interview in the Appropriations Committee hearing room.

Rep. Sawin Millet, R-Waterford, is the lead GOP member of the panel and a former state finance commissioner. He has little faith that all of the assumptions in the revenue forecast will be realized and fears the state’s economy will continue in a “jobless recovery” for longer than projected, reducing expected revenues which assume job growth in budget year 2011 which starts July 1, 2010.

“I worry, I fear, we may have to be back here in a special session in an election year to further adjust the budget and make further cuts,” he said. “That certainly is not a desirable situation for anyone.”

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