AUGUSTA — Lawmakers learned Friday that September revenues were about $28 million under budget, bringing the year-to-date deficit to more than $40 million.
The Appropriations Committee also heard from Gov. John Baldacci’s administration about plans to formulate a supplemental budget in the face of declining revenues.
“The vast majority of the losses are from sales and use tax and the individual income tax,” Mike Allen of Maine Revenue Services told the committee. He pointed out that despite better weather in August, the final month of the tourist season, meals and lodging tax revenues were the same as in June and July.
Rep. Sawin Millett of Waterford, the ranking Republican on the committee, asked Allen why the forecasting continued to be incorrect.
Allen said the economy is still weak and people are continuing to buy less.
Though top economists said the recession technically ended in late summer, they cautioned that job growth would lag, Allen said.
“Projections are that we won’t get back to the total number of jobs we had until 2012 or 2013,” he said. Fewer jobs mean less income tax revenue, he said.
Nationwide, total state tax collections were down about $63 billion in fiscal year 2009, compared to the year before, according to a recent report by the Nelson A. Rockefeller Institute of Government. The New York-based public policy research institute said the loss in revenue is about twice the amount states received during the year from the federal stimulus package.
Ryan Low, commissioner of the Department of Administrative and Financial Services, said Gov. Baldacci has asked state agencies to identify $200 million in potential savings to ensure a balanced budget in the face of the lost revenue.
“The goal is not to have an across-the-board 5 percent cut; it’s meant to generate a menu of options,” Low said, adding that the $200 million figure was an estimate of the needed savings. “It could just have easily been $250 million or $150 million. If it’s less, some of those more awful proposals fall off the list.”
Low said agencies are to report back to him by Oct. 28 with their suggestions. He will walk through the proposals with each department, and final budget decisions will be made in early December.
The governor will decide later this month or in early November whether to issue an order to curtail state spending in certain areas to begin saving money as soon as possible, Low said.
Legislators have met throughout the summer and fall to identify $30 million in structural (ongoing) savings. The $200 million Baldacci is looking for in cuts would be in addition to that $30 million.
“It’s two separate tasks we have, and we’re on the first task now,” said Sen. Bill Diamond, D-Windham, Senate chairman of the Appropriations Committee.
Members also heard reports from State Treasurer David Lemoine, who informed them of finding more than $15 million in savings from debt service restructuring.
Though undecided on whether the $15 million should be considered “structural” savings, the committee unanimously voted to accept the money.
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