State revenues up; so is pressure to spend

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AUGUSTA – Higher than expected revenues will give the state an extra cushion as it moves into next year, but they likely won’t result in a significant increase in the amount of money available for programs now.

With only three scheduled days remaining in the Legislature, the Appropriations Committee has requests for about $270 million in spending before it and only about $730,000 left to allocate.

A recent financial analysis, however, found that General Fund revenues for this year are exceeding expectations by $55 million on three major lines: sales taxes, income taxes and corporate income taxes.

With many lawmakers talking about desperate needs and a controversial proposal for $60 million in transportation bonds still alive, the pressure to tap into the new revenue could be extreme.

During a meeting with reporters Thursday morning, Speaker of the House John Richardson described the good financial news as the payoff for the fiscal restraint shown by the Legislature and Gov. John Baldacci, and a healthy, growing economy.

“We’re seeing the economy improve. Corporate income taxes are up, and that’s a good thing,” Richardson said. “That tells us that the corporations in the state of Maine are profiting.”

He also said that, with just a few exceptions, he would be reluctant to spend any of the new revenue.

“I think at this point it would be unwise to use any of those monies for anything other than a savings account,” Richardson said.

There are also procedural hurdles that would have to be overcome to use any of the new revenue.

According to Becky Wyke, commissioner of the Department of Administrative and Financial Services, the revenue would have to be certified by the Revenue Forecasting Committee before it could be spent. The Forecasting Committee isn’t scheduled to meet again until next fall, although it could be called back sooner. Even if it was, it’s unlikely that it would certify the entire amount because other areas of revenue collection – fees, for example – are still uncertain for the year.

“We also have legitimate needs for the next biennium that we’re not sure how we’re going to fund,” Wyke said, pointing the state’s commitment to raise its share of funding for K-12 education to 55 percent and debt to Maine hospitals. “It’s a good idea to build up the cash reserves and help position the state for the future.”

Current state law would allocate the $55 million according to a bipartisan plan approved as part of the budget: 55 percent would go into reserves, 20 percent would be used to buy down the state’s unfunded pension liability, 15 percent to pay for the unfunded post-retirement health benefits of workers and 10 percent for capital repairs and improvements.

“The formula was put into effect as a way to strengthen the financial future of the state,” state Sen. Peggy Rotundo, D-Lewiston, and chairwoman of Appropriations Committee, said. “Anything that’s left at the end of the year is put into reserves or used to pay down some of our unfunded liabilities.”

Wyke adds the caveat: “But the Legislature can do what it wants.”

“It’s kind of a crazy system,” said Rep. Joseph Brannigan, D-Portland, and House chairman of the Appropriations Committee. “We pass all these ideas that we like, but there’s no money to fund them.”

That leaves the bills sitting in the Appropriations Committee, awaiting a recommendation on how much money is available.

“Naturally, there are a lot of people who would like to use some of the new money. There’s a tremendous desire to support some of these good ideas,” Brannigan said. “But whether we have a $1 million or $40 million, we still have to make choices.”

The Legislature’s hands are completely tied, or limited to the $730,000, Wyke said. There’s other money that might be able to be shifted around since the supplemental budget passed earlier this year.

Richardson, even while pointing to the need to save, offered an example of a worthy project, the state’s computer crimes task force, which has a backlog of cases awaiting attention and needs $300,000.

“We have sexual predators who surf the Web on the Internet looking for children,” Richardson said. “We have a backlog of computers that have not yet been reviewed.

As a result we ought to be thinking of using some of those monies for things like that, dire issues that need immediate attention. That seems like a very wise use of those monies.”

Another example of a worthwhile program awaiting action in Appropriations is Meals on Wheels. The program, which delivers hot meals to shut-ins, needs funding to make up for the high cost of gasoline, Rotundo said.

“Volunteers and drivers are taking a greater and greater loss,” Rotundo said. “With gas prices so high, people are being reimbursed drastically below what it costs to deliver the meals. If we lose those drivers, there not much of a program left.”

“But I think a very large percentage of those monies ought to be put away,” Richardson said. “And we ought not to be touching it for anything other than emergency uses. I’ve been around here long enough to know that even though the sun is shining today, it could be raining tomorrow.”

Rotundo said that she will advocate for a conservative approach to any new money projected for the year. “I am not interested in tapping into the surplus at all. It can provide greater security for the state’s future.”

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