AP News

Red ink flowing in Maine budget


AUGUSTA, Maine (AP) — The stubbornly weak economy is darkening Maine's revenue prospects for the next two years by more than $160 million, and the gloomy new figures will likely force Gov. Paul LePage to issue a state spending curtailment order in December.

The state's Revenue Forecasting Committee on Wednesday prepared numbers to be formally presented to the Legislature's Appropriations Committee on Thursday. They show revenues lagging behind earlier estimates by at least $35 million this fiscal year, which ends June 30, and by $128 million during the two-year budget cycle, which starts next July 1.

It means the Legislature will have that much less money to authorize for state programs in those budgets. The state's general fund budget for two years is a little over $6 billion.

Finance officials said the biggest contributors to the red ink are under-performance of individual and corporate income taxes and sales and use taxes, all the result of an economy that refuses to bounce back to strength.

"The economy has certainly remained in a sluggish rate of growth," said Michael Allen, associate commissioner for tax policy. Consumer wariness over the November election, the fiscal cliff issue in Congress and the continuing European debt crisis also play major roles in eroding consumer confidence, he said.

"You have a lot of caution out there on the part of businesses and consumers," said Allen.

The LePage administration is getting ready for immediate action on the looming $35 million shortfall, said Finance Commissioner Sawin Millett. The governor's curtailment order would, should he issue it, cut back spending in select areas, and the cuts would later be formalized in a budget approved by the Legislature.

"We had hoped we might see some black ink, maybe in '13 or in the ('14-'15) biennium. It does not look that way now, and we will just have to find ways to bring spending down in line with revenues for both the current year and the upcoming biennium," said Finance Commissioner Sawin Millett. Asked if the adjustments should be made before Jan. 1, Millett said, "The sooner the better."

Top legislative Democrats said they were surprised to have heard the new figures from reporters and not the governor's office.

"Yet, we stand ready to work to solve the state's challenging fiscal issues in a fair and thoughtful way. We hope the governor will join us," said Senate President-elect Justin Alfond of Portland.

"I think all of us need to take a deep breath," said Rep. Mark Eves of Berwick, who will be House speaker after the Legislature convenes Dec. 5.

The recalculated general fund figures were not the only bad news to come out of the State House on Wednesday. Revenue officials also said the state's highway fund, which pays for roads' and bridges' upkeep largely through fuel taxes, was lagging by $20 million in the next two-year budget cycle.


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