AUGUSTA (AP) – A new forecast Monday from a panel of state experts spells new complications for Gov. John Baldacci and budget-writing lawmakers in the Maine Legislature.

The state’s Revenue Forecasting Committee said General Fund revenue for the rest of the current fiscal year, which ends June 30, will be almost $34 million less than expected. At the same time, the panel reduced its revenue forecast for the subsequent two years by another $40 million.

“That’s worse than I thought,” said a ranking Republican on the Legislature’s Appropriations Committee, Sen. Karl Turner of Cumberland.

Last month, with a report due by March 1, the six-member forecasting panel decided to defer adjustments in its projections until after March 15, a deadline for final returns by businesses that use a calendar year for tax purposes.

At the time, the committee hinted that there could be a formal reduction of its revenue estimates by $20 million for fiscal year 2007 and $16 million for fiscal years 2008-2009.

The downward revisions agreed upon Monday were even more pronounced and attributed mainly to a failure of the corporate income tax line to meet expectations.

“The changes to the corporate income tax represent a reversal of a substantial portion of the upward revision that the RFC recommended in its December 2006 forecast,” the forecasting committee wrote in a three-page memorandum to the governor and lawmakers.

“At that time, the indications were that corporate income tax payments were showing very healthy growth consistent with national trends. It now appears that the spike in receipts at the end of FY06 was a timing issue that is being reversed as this fiscal year moves forward,” the forecasting committee memo said.

The Senate chairwoman of the Appropriations Committee, Democrat Margaret Rotundo of Lewiston, reacted with resignation and said lawmakers would await proposed changes from the Baldacci administration.

“We’ll get through it,” Rotundo said. “We’ll be waiting to hear from them and we will do what we need to do to address the shortfall.”

Forecasting committee members told the Appropriations Committee during a late afternoon briefing that the corporate income tax shortfall did not reflect economic weakness but rather stemmed from problems with past projections.

For the biennial budget, which is due to be in place for the two-year period beginning July 1, the governor and Legislature will have time to review replacement options, said Democratic Rep. Jeremy Fischer of Presque Isle, the House chairman of the Appropriations Committee.

To meet shorter-term demands over the remainder of fiscal 2007, Fischer said he thought the Baldacci administration might propose in part the use of rainy day fund reserves.

Baldacci budget chief Rebecca Wyke said applying reserves could be an option for the current fiscal year but not for the new biennium.

and that in any event the administration would look toward cuts first.

“It’s our hope that we can close most of the ’07 gap with reductions,” she said.

AP-ES-03-26-07 1803EDT