AUGUSTA (AP) – In a move that could force sharp budget cuts or demand new revenue, a state panel Monday affirmed the basics of a $95-million downward revision of Maine’s General Fund estimates.

The reductions by the six-member state Revenue Forecasting Committee reflect in large part pessimism about sales and corporate tax collections as well as an acknowledgment that the state is not in position to collect what it once expected from dormant gift card assets for cards purchased in Maine from out-of-state corporations that have become resistant.

Already trying to settle on a final $10.1 million in savings to balance the state’s $6.3 billion budget for the current two year, lawmakers now will face new pressures when they reconvene in January.

The amount of the downward adjustment approaches in size, for example, what the state expends over two years – about $107 million – for the operation of the Maine Community College System and is nearly double the two-year $49-million base budget of the Legislature.

By way of another comparison, one penny on the state’s 5 percent sales tax would generate around $150 million a year.

“Keep in mind, you’re dealing with a $6 billion budget,” said the forecasting panel’s chairman, acting State Tax Assessor Jerome Gerard. “There are significant variables here.”

Noting that some larger states have similar and larger fiscal problems, Gerard added: “I’m not trying to play it down. … It does create significant pain.”

Individual portions of the downward readjustment include lowering sales tax projections by $21 million and about $20 million for fiscal years 2008 and 2009 and reductions in corporate tax line projections for the same years of $7.4 million and $7.3 million.

Estimates for cigarette and tobacco tax collections were also dropped by about $12 million.

Additionally, projections for unclaimed property gains linked to gift cards were reduced by more than $28 million for the two-year budget cycle and Department of Health and Human Services lines were scaled back by about $20 million.

As the forecasting panel was deliberating Monday, Gov. John Baldacci announced the creation of a business advisory group, the Council on Competitiveness and the Economy, to succed a previously named Council on Jobs, Innovation and the Economy.

“The Council I am creating today will be the foundation of a public-private partnership that provides nonpartisan perspectives on issues related to business and economic growth within the state,” Baldacci said in a statement.

Over the summer, the Baldacci administration reported that the state General Fund finished the 2007 fiscal year, which closed June 30, with a surplus of $19.1 million and the state’s Highway Fund finished with a surplus of almost $1.7 million. Officials said Maine also finished the fiscal year with $156.1 million in reserve funds.

Revenue track in the months before that proved challenging.

Last March, the Revenue Forecasting Committee said General Fund revenue for the rest of 2007 fiscal year would 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.

The downward adjustments were attributed largely to poorer than anticipated corporate tax receipts.

Then in May, responding to a more favorable than expected performance on the individual income tax line, the forecasting panel increased General Fund revenue estimates by $17.8 million for fiscal year 2007 and by an additional $1.5 million for the 2008-2009 biennium.

AP-ES-11-19-07 1628EST