Tuesday, March 11, 2014
By Michael Shepherd firstname.lastname@example.org
State House Bureau
AUGUSTA — The state's Revenue Forecasting Committee said Friday that legislators will have to take more than $60 million out of a proposed budget package for the next two-year cycle because of declining revenue projections.
That adds to an already-projected $880 million gap between spending and revenues in that budget. Since Maine law requires legislators to pass and maintain a balanced budget, the new revenue projection will have to be accounted for.
However, the committee also delivered some good news on Friday: State revenue projections for the current fiscal year, which ends June 30, are up by $43 million.
If the projections hold up, that money could go toward filling the future gap, said Grant Pennoyer, director of the Legislature's Office of Fiscal and Program Review and a member of the committee.
The surplus for the current year is driven by income taxes. Revenue from individual income taxes is running $80 million ahead of projections, while revenue from sales, use and corporate taxes is projected to be about $37 million less than anticipated. That works out to a projected excess of $43 million.
Those taxes are also largely to blame for the two-year projected revenue gap.
In a statement, Sawin Millett, commissioner of the Department of Administrative and Financial Services, said the gap "is not unexpected" and the department is currently working on changes to Gov. Paul LePage's proposed budget for the next two budget years.
"When sales and corporate taxes are down by this much it is a clear sign that Maine businesses are struggling," LePage said in a statement. "Uncertainty in the national economy is compounding a growing lack of confidence among business owners, inhibiting their ability to expand and hire people."
Rep. Peggy Rotundo, D-Lewiston and House chairwoman of the Legislature's budget-writing committee, called the revenue projection "a mixed report with a one-time bump in income tax revenue."
"But what the data show is that Maine's economy is not keeping pace with the national economy and we are not seeing the promised economic growth from Gov. LePage's policies," Rotundo said.
Michael Shepherd can be contacted at 370-7652 or at: