AUGUSTA, Maine — The state ended the budget year last month with a surplus of $70.4 million, higher than expected as revenues in June were above estimates and state agencies spent less than appropriated.
“The surplus puts Maine in a better position to address a number of challenges facing our state,” Gov. John Baldacci said in a statement. “We are beginning to see signs that our economy is recovering from the recession, but things remain fragile and we must be vigilant. The surplus is good news, but it’s not the end of the story.”
Most of the surplus came from revenue coming in above estimates, but $7.6 million was from unspent appropriations across state government.
Acting Finance Commissioner Ellen Schneiter said revenues in June were a mixed bag, with the sales tax continuing to come in slightly above projections, while the personal income tax ended the year slightly under estimates.
Schneiter said revenue from corporate income tax and tobacco taxes also came in higher than expected in June.
“They were way up,” she said. “They were $2.8 million [above estimates] for the month and $8.9 million for the year.”
Rep. Emily Cain, D-Orono, the co-chair of the Legislature’s Appropriations Committee said while the final surplus numbers are good news, the state is facing significant financial problems. She said unless Congress provides additional aid, the budget must be cut by $100 million.
“We are in the first month of a new fiscal year in the middle of what so far has been a decent summer for the tourist season,” she said. “But, we have to be mindful of the fact it was not all that long ago that we were facing hundreds of millions of dollars in shortfalls.”
Cain said that while revenues are looking positive, she wants to see several more months of improvement before she is assured the recession is ending and a recovery is under way.
“We made a lot of cuts to balance this budget and this surplus would not begin to pay for restoring many of those programs, “she said.
Sen. Richard Rosen, R-Bucksport, the GOP senator on the committee, said he is pleased revenues appear to have stabilized over the last few months, but said the size of the surplus is very small compared to the $2.7 billion in revenues taken in during the year.
“We seem to have leveled off and so that seems to be the positive signal here,” he said. “We can feel some confidence in the projected revenue numbers.”
But, Rosen was quick to add he will be watching the revenue numbers closely over the next few months to see whether they continue to meet or slightly exceed expectations.
Both say the governor needs to continue the process of identifying $100 million in cuts should Congress not provide additional aid to the state. Only the Legislature can change the way the surplus is allocated, and it is not in session.
The hope is the surplus, as well as any additional revenues over estimates over the next few months will allow the governor to curtail a lesser amount of spending until the new Legislature takes office Dec. 1.
State law dictates that the surplus be shared by the state’s General Fund, rainy day fund, retirement system, and loan insurance reserve at the Finance Authority of Maine, as well as the governor’s contingency account.
The Associated Press contributed to this report.