AUGUSTA (AP) – With the state budget already facing a gap of close to $1 billion, a new analysis by a state panel found the Maine economy has been deteriorating fast and that expected job losses have doubled.

Maine’s Consensus Economic Forecasting Commission, which helps shape the budget debate, thinks the recession will be much deeper than was projected in November and that Maine appears to have felt the effects of the national recession much later than other states.

Worse, the panel suggests Maine likely will be slower to recover.

Additionally, the panel projects job losses from the end of 2007 though mid-2010 at about 36,000 – twice as many as predicted in the previous forecast.

That many job losses -and commission Chairman Charles Colgan says the state is approaching the midway point toward such a nadir -would be equivalent to those during the 1990-1991 recession.

State budget writers foresee a new revenue gap but won’t know how big until May. At that time, the state is all but certain to officially lower revenue estimates; job losses mean the state is almost sure to see declines in sales tax and income tax revenue.

While waiting for the revenue estimates due May 1, Gov. John Baldacci and legislative leaders are discussing whether to enact a $6 billion-plus two-year General Fund spending plan now or hold off.

On Jan. 9, Baldacci proposed a General Fund spending package of $6.1 billion for the two-year cycle beginning July 1.

Relying on a combination of cutbacks, new assumptions and anticipated federal stimulus money, it was designed to cover a gap between spending demands and anticipated revenue that legislative staff has pegged at $965 million.

Some majority Democrats argue that it would be prudent to lay out a basic spending blueprint as soon as possible and then adjust as needed. But some in the Republican minority House and Senate caucuses question the wisdom of acting before a fully developed revenue picture emerges.

AP-ES-04-01-09 1524EDT


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