AUGUSTA — Maine’s two-year budget could be an additional $40 million in the black by the end of the fiscal year in June, the state’s revenue forecasting committee said Friday, but some on the panel voiced concerns that the strong economy could sour in light of a potential coronavirus pandemic.

The committee increased its revenue forecast up by $40 million for the 2020 fiscal year and by $139 million for the next two-year cycle ending in June 2023. The state budget for the current two-year cycle, which ends in June 2021, is $8 billion.

In a prepared statement, Gov. Janet Mills said the increased revenue strengthened the case for the priorities in her recently proposed supplemental budget, but her statement made no mention of the coronavirus concerns raised by some on the committee. Global stock markets have tumbled this week in response to the spreading virus.

Mills, a Democrat, said she had directed her administration to consider two goals for the projected revenues: targeting reforms to the state’s Medicaid system and socking away some of the money in the state’s budget stabilization – or rainy day fund – to brace against potential cuts in Medicaid funding by the Trump administration.

“The new forecast provides an opportunity to strengthen our ability to provide Maine people critical services in the face of emerging challenges and threats like a new proposal by the Trump administration that would tie states’ hands in financing their Medicaid programs,” Maine Health and Human Services Commissioner Jeanne Lambrew said in a prepared statement.

Mills’ press secretary, Lindsay Crete, said the governor was monitoring the impact of the coronavirus on the economy and revenue, and would take that into consideration as she prepared recommended changes to her budget proposal in the days ahead.

Michael Allen, an associate commissioner for tax policy at the Maine Revenue Service and chair of the revenue forecasting committee, said the panel discussed the potential for developing a new forecast if the economy takes a hit from coronavirus. Allen said the committee was not making an ominous prediction but trying to be practical.

“We’ve got this issue out there that everybody is obviously monitoring and so forth, if somehow this does lead to some deterioration, even a temporary deterioration of the economy and revenues, what’s the process to respond to that?” Allen said.

He noted that shifts in the national economy can play out differently in Maine. For example, a decrease in air travel by Mainers after the Sept. 11, 2001, terrorist attacks caused a uptick in sales tax revenue as more Mainers stayed home.

As to the $40 million increase projected for the current fiscal year, that figure is largely based on economic activity that already has happened and on tax revenue that will come from 2019 taxpayers when they file by the April 15 deadline, he said.

Mills presented the Legislature with a $127 million supplemental budget in February that adds caseworkers to the Department of Health and Human Services and troopers to Maine State Police, and funnels an additional $37 million a year to public schools, among other initiatives.

While Democrats in the Legislature have been generally supportive of Mills’ proposal, Republicans have voiced frustration and concern that she only offered $10 million to the state’s highway fund for road and bridge construction and repair. Republicans say the state needs to move away from its long-standing practice of borrowing to help fund highway repairs.

However, Mills is the only governor in recent history to offer any general fund revenues for the Maine Department of Transportation’s highway fund, which stands on its own and is largely funded by taxes motorists pay on gasoline and diesel.

The new projection from the Maine Revenue Forecasting Committee is one of two forecasts required by state law that are completed each year and delivered to the governor and the Legislature.

Department of Administrative and Financial Services Commissioner Kirsten Figueroa said Friday’s forecast reflects the continued strength of Maine’s economy.

“It supports and strengthens the important work done by the administration for the biennial budget and for the supplemental budget proposal, and positions us well to continue working with the Legislature to address critical needs and savings,” she said.

 

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