AUGUSTA (AP) – Gov. John Baldacci said Thursday it is premature to say how his pending budget-balancing initiative would be revised if, as expected, a new state revenue forecast at the end of the month opens up the current $95-million revenue gap even wider.

But in saying his pledges of no tax increases and no use of Rainy Day reserves still stand, Baldacci did not rule out a revamped approach if the fiscal picture significantly darkens.

“We’re not there yet … Let’s just see what it is first,” Baldacci said.

Earlier this week, State House correspondence indicated that top legislative budget writers have more than doubled the target for savings needed to keep the state General Fund in the black.

Appropriations Committee leaders are asking other committees to recommend ways to reduce spending by $99 million more than the cutbacks already put forth by Baldacci to close a $95 million revenue gap.

Similar instructions went out from Baldacci budget officials to the heads of state departments and agencies.

Baldacci’s budget-balancing initiative so far relies in large measure on trimming social programs to cover the $95 million revenue shortfall and to meet other unanticipated costs.

A state advisory panel updated its forecast for the Maine economy last month, expressing noticeable pessimism even as anti-recession initiatives on the federal level got under way.

The Consensus Economic Forecasting Commission scaled back its 2008 prediction for job growth from 0.3 percent to zero and dropped its anticipated growth estimate for personal income for the year from 4.4 percent to 3.5 percent.

“This round of adjustments primarily reflects lower expectations for national growth and sustained high energy prices,” the panel said in its report.

The new forecast appears to make it harder for a second panel to avoid a new reduction in state revenue projections in its March 1 report.

There is widespread belief at the State House that General Fund revenue trends will probably deteriorate further and be reflected in updated projections when the Revenue Forecasting Committee meets Feb. 25.

“We’re going to have to tighten the belts some more,” Baldacci said Thursday as advocates for and beneficiaries of various social service programs packed the hearing room of the Legislature’s Appropriations Committee to argue against substantial cuts.

Requesting new batches of departmental information in a Wednesday memo, Baldacci budget officials wrote:

“Last month the governor put forward a supplemental budget to close the $95 (million) revenue shortfall forecasted by the Revenue Forecasting Committee in its annual forecast on December 1, 2007. However, a worsening national economy is expected to result in a negative adjustment to the revenue forecast when the RFC meets again at the end of this month.

“In addition, we are facing a substantial loss of federal revenues and matching funds as a result of several new Medicaid rules that are scheduled to go into effect during the biennium.

“The magnitude of the resulting structural budget deficit presents us with a serious challenge in terms of maintaining a balanced budget and also meeting the most critical service needs of Maine citizens.”

AP-ES-02-07-08 1751EST

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