AUGUSTA (AP) – Less than half of a $95 million drop in state revenue estimates will hit in the current fiscal year, but the timing probably makes the short-term problem more daunting than the longer-term challenge.

Since the current fiscal year is already almost five months old, efforts within state government to cope with the revenue reduction will have to be implemented in a tight time frame.

The revenue rollback through next June 30, when fiscal 2008 ends, is pegged at $38 million. And savings steps that require legislative approval will have to wait at least until January, when lawmakers reconvene.

That schedule leaves six months or less for legislative initiatives to be approved and put into effect.

So, for instance, in addressing fiscal 2008, a cut that would produce $1,000 in savings over a full year would have to be at least twice as deep to produce similar savings during a mere half a year.

Currently the state has nearly $160 million in reserves – about $117 million in a budget stabilization fund and about $40 million in operating capital reserves.

The Legislature’s Appropriations Committee is already at work, but mostly looking backward, not forward.

Since summer, the budget panel has been reviewing ways to cover a last $10.1 million hole in the $6.3 billion two-year General Fund spending plan that was enacted earlier this year.

Appropriations panelists are scheduled to meet again in mid-December.

The state Revenue Forecasting Committee is putting the finishing touches on a report due by Dec. 1 that specifies the $95 million cut in General Fund revenue projections.

On Monday, the forecasters expressed pessimism about sales and corporate tax collections and acknowledged that the state is unlikely to collect what it once expected from dormant gift card assets for cards purchased in Maine from out-of-state corporations.

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.

AP-ES-11-20-07 1302EST

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