AUGUSTA — State revenues are $51 million higher than anticipated, lawmakers learned Tuesday— a welcome bit of news after months of dismal revenue forecasts.

Jerome Gerard, chairman of the Revenue Forecasting Committee, told members of the Appropriations Committee that individual income and corporate income taxes are performing stronger than predicted.

“These changes to General Fund tax receipts are a reflection of an economy in the early stages of a slow economic recovery from the so-called Great Recession,” said Gerard, the acting state tax assessor.

Gerard and Michael Allen, Maine Revenue Services’ director of econometric research, tempered the good news with warnings that a spike in oil prices or some unforeseen international event could turn what they believe will be a slow recovery into another recession.

“It is important to note, however, that the recovery remains fragile, and the weak recovery is highly susceptible to numerous risks both from within and outside the U.S.,” Gerard said.

The $51 million, when combined with $26.7 million in unanticipated additional federal Medicare money announced late last week, reduces the state revenue gap to $360 million, said Ryan Low, commissioner of the Department of Administrative and Financial Services.

Low will present a second budget change package from Gov. John Baldacci to lawmakers next week that will reflect the renewed revenue projections, he said

In December 2009, Baldacci presented the Legislature with a $438 million supplemental budget that cut education, human services, state jobs and money for cities and towns. Earlier this month, Baldacci proposed eliminating three state shutdown days and restoring longevity pay for state workers by pushing state paychecks from one fiscal year into the next.

This time around, his proposal will restore some cuts in human services and other areas, Low said.

“Our focus in human services will be where we provide 24/7 care,” he said. “We can’t mitigate all the cuts.”

Some of those round-the-clock services include nursing homes, assisted-living centers and private nonmedical institutions, he said.

Legislators are continuing to work to bring the state’s $5.8 billion, two-year budget into balance. Today, they will work with members of the Health and Human Services Committee on proposed cuts in that portion of the budget.

Also, members of Appropriations said Tuesday they need more information on whether a $35 million placeholder in the budget will come through from the federal government. The new revenue projection, and uncertainty about the federal money, may mean lawmakers should be cautious about reallocating the new money, said Rep. John Robinson, R-Raymond.

“It would be incredibly shortsighted of the committee and the administration to restore all funds via cuts and not be preparing the rainy day fund to make sure we are looking forward,” he said.

Others said lawmakers should restore cuts they deem to be painful.

“I would hope we would consider not recommending unnecessary cuts,” said Senate Chairman Bill Diamond, D-Windham. “We can put this money where it is needed.”

Susan Cover — 620-7015
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