AUGUSTA (AP) – Days ahead of a review that could prompt new adjustments to Maine’s state budget, lawmakers are being told overall General Fund revenue is just about keeping pace with projections but that sales tax receipts are lagging and likely to drop more.

Revenue from the Highway Fund, meanwhile, continues to fall short of official estimates.

Since July 1, when a new $6.3 billion two-year General Fund budget took effect, treasury collections from General Fund lines – which include individual income and sales taxes – have been $836 million, $3.2 million or 0.4 percent below budget.

Highway Fund revenue for the same first four months of fiscal 2008 totaled $92.2 million, according to legislative analysts. That was under estimate by $5.4 million or 5.5 percent.

The new legislative analysis said sales tax collections in October, reflecting September sales, ran about $3 million behind projections for the month and brought a year-to-date sales tax shortfall to $5.8 million or 2 percent.

“With the recent record high oil prices as we head into the heating season, this negative variance is expected to worsen as more taxable sales are displaced with tax-exempt fuel oil purchases,” the analysis being distributed in advance of a meeting today of the 10-member Legislative Council said.

Most of the Highway Fund shortfall was attributed to lower-than-anticipated fuel taxes.

On Wednesday, a top U.S. Energy Department official said oil prices are likely to fall at least another $10 a barrel by next year, but warned that gasoline and heating oil prices will continue to rise in coming weeks.

Guy Caruso, chief of the Energy Department’s statistical division, the Energy Information Administration, predicted gasoline prices, averaging $3.11 a gallon nationwide, will rise another 10 cents a gallon by December.

Caruso also said the retail cost of heating oil is expected to rise about 25 percent from a year ago to an average of $3.05 a gallon.

On Monday, members of the state’s Revenue Forecasting Committee meet to discuss an update of revenue projections due by Dec. 1. If that committee significantly lowers its projections, the Baldacci administration and state lawmakers will have to ensure a biennial spending blueprint conforms.

The Legislature’s Appropriations Committee is still working to agree on the details of a final $10.1 million in savings specified in the General Fund budget.

Having met intermittently since the summer, the Appropriations panel reconvenes Thursday and Friday.

A new forecast this week by the New England Economic Partnership said Maine is expected to see the slowest employment growth in New England through 2011, averaging 0.5 percent per year, including 0.1 percent in 2008.

New housing permits are forecast to fall by nearly 25 percent this year, and another 19 percent next year before rebounding in 2009, the NEEP forecast said.

The regional forecast organization predicts New England will continue to experience slower gross product growth than the nation over the next few years, with new Hampshire posting the region’s fastest growth at 3 percent.

AP-ES-11-14-07 1537EST


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