Maine lawmakers fear more red ink
State House

Maine lawmakers fear more red ink


By Mal Leary
Capitol News Service

AUGUSTA, Maine — Even with state revenues now forecast to come in nearly $400 million lower than previously expected, members of the Legislature’s Appropriations Committee fear the shortfall could get worse yet.

On Friday the revenue forecasting committee projected state revenues will be about $384 million less over the two-year state budget than they estimated last spring. But legislators are bracing for further accumulation of red ink as they work to adjust the budget.

“I am not confident now about anything to do with the economy,” said Sen. Bill Diamond, D-Windham, co-chairman of the Appropriations Committee. “This is the best guesses of the best minds,” he said of the forecasting committee.

He said the same group had reprojected revenues down last April, only to have May revenues fall $21.2 million below that new projection. He said revenues have not met estimates since then.

“I am not saying they are not trying,” Diamond said, “or doing anything wrong. Nobody has gotten this recession right, at least not yet.”

Rep. Emily Cain, D-Orono, agreed. She said the committee will use the new revenue forecast as “a starting point” as it works on a plan to bring the state budget into balance.

“The governor will propose his plan in December and we will hold hearings on that as soon as we can,” she said. “But we will be multitasking as we review what he is proposing because we know we may have to go further than he proposes if revenues do not hold up.”

Cain said the revenue forecasting group has done the best it can with the data and resources it has to project revenues months into the future. But, she said, lawmakers on the panel realize the group’s best effort may not be good enough.

“This recession has been unpredictable,” she said. “We know revenues could get worse and we have to be ready to handle another revenue problem.”

Rep. Richard Rosen, R-Bucksport, the only GOP senator on the committee, said the budget-writing panel cannot assume there will not be further revenue problems, given the history of this recession. He said the reprojection is what the group will work with until changes are made, likely next spring.

“What I watch is the unemployment and the underemployment figures,” he said. “When the hours of workers increase, when the workweek shifts from part time to full time, when firms begin to start hiring people, that is what I am looking for to see that we have started to have a change in this situation.”

Until that happens, Rosen said, he expects revenues will continue to fail to meet estimates and lawmakers will have to adjust the budget.

During their discussion of the revenue forecast Friday, committee members were clear that the estimates were built on a lot of assumptions that could prove wrong. For example, Mike Allen, research director at Maine Revenue Services, said energy prices are a variable that could greatly affect the forecast.

“From what I have read, there is a real tipping point on energy prices where when you get to $3 a gallon for gasoline, there is an impact on what people do,” he said. “When consumers stop buying, it has a big impact on state revenues.”

Allen said home heating oil is another energy-related cost for homeowners that could affect state revenues as families spend less on everything from big-ticket items such as new TVs to going out to dinner less to pay higher heating bills. The state’s second-largest source of revenue is the sales tax.

As for concerns about the accuracy of the panel’s forecast, committee chairman Jerome Gerard, the acting executive director of Maine Revenue Services, said the group has made its “best effort” given the uncertainty of the national economy that dominates what happens in Maine.

“This is tough,” he said. “Forecasting is a really tough thing to do.”

Some panel members are concerned whether all of the assumptions they have made are correct. Jim Breece, an economics professor at the University of Maine, is worried whether there will be any growth in the second year of the budget, given the mixed signs from the business community.

Allen said the models he uses to predict revenues are based on the economic forecast and are adjusted based on historical data from the IRS on actual tax returns. He said he hopes forecasters have done their best in predicting what revenues will bring to the treasury over the remainder of the budget cycle.

“I think that is the best anybody can say,” he said. “This has been just one big roller coaster ride and it has all been downhill so far. So hopefully, we are done with the downhill portion and we will start up a little bit.”

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Comments
25 comments on this item

Perhaps Sen Rosen should come clean about the underfunded state pensions. The last time it was exposed, he exclaimed: "I was shocked", as if he didn't already know. If he didn't know, that would be more like gross incompetency.

Here are some ways to further starve and confuse the beast:

1. Shop online or in New Hampshire

2. Barter with neighbors, friends, and relatives

3. Cut down on driving - walking is still untaxed (for now)

4. Apply for fuel assistance/SNAP/TANF/MaineCare, etc. Flood them with paperwork!

5. If you are a cashier, ring up items as non-taxable

6. Quit smoking cigarettes, or roll your own

7. Go a month beyond your vehicle's registration

8. Buy secondhand through craigslist or Uncle Henry's

9. Cut down on soda, wine, beer, liquor and bottled water

10. Boycott the lottery - even for a day

Revolution starts at home.

Oh forgot one...I had to get a copy of a birth certificate recently. The state wants $60 - SIXTY FREAKIN' DOLLARS - for a certified copy. Go to city hall in the municipality of birth...it's $10-$12...

No more lottery tickets

Stop spending on sacred cows such as new schools. 4 schools around Bangor = $173,000,000!

SAVE SAVE SAVE!!!!!! Don't spend starve the beast!!!!!

Let's start at the top!! If the Legislators couldn't see this coming, they were totally BLIND!!! Let's start getting rid of them one by one!!

When people lose their jobs, they obviously can't keep their homes, pay their taxes, go out to eat, buy extras, travel, or purchase luxury items of any kind. Do you think for one second that anyone is going to pay their taxes on a home they aren't going to own in a few months? NO, of course not, their primary focus is to keep what little they have and get out of dodge. They need to find a job and keep a roof over the heads. These folks are in SURVIVAL MODE... they need the basic necessities like: Food, Water and Shelter. Who cares about anything else when you don't have money for the bare necessities?

If there are no jobs and no homeowners to pay taxes, we obviously can't afford to be spending more State and Federal money. These Senators, Governors and Legislators are so happy to get rid of jobs, but aren't willing to cut their own income or those of their friends. They made these mistakes and they should be the first on the chopping block, because they obviously aren't learning anything. A little Business 101 "might" help them.

These wonderful Senators were so busy trying to save their friends at AIG, JP Morgan, Citigroup, Wells Fargo, Bank of America, Merrill Lynch, Goldman Sachs and 24 other banks plus.... GM, Ford Motor and Chrysler at the tune of over $600 Billion dollars in bailout money, they forgot about the American people... the common folks who have families to feed, have homes and pay their taxes that continue to feed the economy. That money would certainly have been far better spent, helping new companies emerge as the old ones failed. Putting stock in emerging companies would have put our economy on the right track much sooner than trying to run around and put a huge tampon in every freeking bleeding hole these companies were bleeding from. There are so many holes now, they can't find enough tampons to even begin fill the holes.

Who in the name of God thought about giving billions of dollars to these pharmaceutical companies when our economy was in dire straits? . The money in Ad's for this vaccine, was also in the billions of dollars... and that was spent by our wonderful CDC... OH, and they aren't done yet!!! The big wigs who created this whole thing, are rolling in the dough and laughing all the way to the bank!

The Federal and State government should have let these places FAIL. They should have lost everything they had and that would have left American's with many jobs and plenty more to fill the shoes of those who lost their businesses, because people would have found ways to produce more businesses to pick up where the failed ones left off.

We're truly STUPID Americans.... we don't pay attention to anything, we don't watch our City Councilors, our Planning Boards, City Mayors, Legislators, Senators, Governors, Banks, or anybody else. We blame the Democrats the Republicans, our neighbors, China and anyone who looks at us cross-eyed. We blame everyone but ourselves. I'm telling you people, you better start taking control today or you're all going to starve. This country has no money... WAKE UP!!!

Oh, and before I forget... We saved the stock market too!!! That my friends, is a gamble... you win some you lose some... But ALL the American tax payers bailed out the stock market. Remember that when you can't feed your kids.

Remember.....Indian casino in Sanford. $200 million a year to the state in taxes. 75% of the income from out of state players. NEW MONEY unlike Hollywood Slots and the Maine Lottery which is 95% recycled Maine money and as a bonus you get George McHale, Chief Lobbyist for Hollywood Slots opposing any competition. What it's like to be from Maine. And of course almost forgot the biggots Lisa Gorman and the Leon!

Is there anyone that can handle the states money?. The cuts should be with the Reps themselves. As soon as this state starts looking around to raise things like Reg fees, bottle ret fees,Fishing Lic fees ect, You know something is wrong. Cut down on the number of Reps. Then they will watch with more caution where the money goes cause their A__s would be next. Again I have to remind everyone, that the Maine Income Tax was surpose to be temp. But the state has made it permant as like all things the state does.

RogereastMill 8:00 AM~ Yes, they are grasping at literal straws now... RED FLAG or what???!!!

Just to be accurate here:

"Jim Breece, an economics professor at the University of Maine..."

Mr. Breece is not paid as an economics professor at UMaine, he is Vice Chancellor at the University of Maine System's bloated office in Bangor at a salary in 2008 of $167,074 + benefits $67,331 = $234,405/year cost. Hey baldy in Augusta - ya think maybe it's time to slice down that office in the interest of saving a few old person's health services?

Come on folks...these are the " best minds," as Senator Diamond said. We have been led by the best minds for 40 years in this State, and we are in real trouble. And please note, we were in real trouble long before that favorite whack a bout George Bush let us all down. We need to clean us in Augusta. We need to swallow hard , change this States direction, and endure the pain. We need to stop all the social welfare non profit services that the democrats have created, and we have to step up to the plate as private citizens to care for the truly needy just as our forefathers did. The only way to right this ship of State is to throw the baby out with the bath water; rush out into the street and pick up the baby; nurse him back to health; and never let the social do gooders do this to us again.

If you have names and salary amounts and justified reasons for cuts.... List them here!!! I think Augusta needs a little help with this matter.

Completely ridiculous! The very last program in Maine that needs to be cut is education. Thank God the Federal Govt has limits on education cuts or our kids would all end up as intelligent as the people in charge of the departmental budgets. One has to wonder why CA with a population of 36,756,666 can run with 240,387 full, part, and temp employees when Maine with a population of like 1,316,456 needs somewhere between 28000-32000. But yeah, keep right on cutting education so that all the up and coming kids can be welfare dependent too because they drop out, or can't read and write.

What about Rebecca Wyke who was hired in September of 2008 who joined the state university system as its vice chancellor for finance and administration at a starting salary of: $165,000.00.

http://www.maine.edu/pdf/8-12-08Wykerelease.pdf

.

Jim Breece

http://www.umaine.edu/soe/files/2009/06/breece-professional-cv-apri.pd

How many freeking Chancellor's does one system need?!!

The both branches in Augusta either a) saw this coming and simply hoped it wouldn't, or b).didn't see it coming, and they are incompetent.

I would say they look like a bunch of shoe clerks, but that would be a slam on shoe clerks!

Opinionated 11/23/09 9:11 AM~ I agree with you to a degree. We do not need budget cuts for primary and secondary educations. But why in the world do we need 2 chancellors at one college in Bangor?

Discussing these facts really makes a huge difference in the overall picture and we as citizens, can then go to Augusta with our complaints.

We need to raise the roof in Augusta and D.C., it they even breathe a word about any more bailouts!!!!

Sen Cain, your degree is in finance? accounting? oh yeah music apreciation... any you have worked where?

appreciation

I'm in agreement with cutting some of those university big wigs instead of other positions being cut in state government, people who really work for a living, people who do important things like answering you when you call 9-1-1!

Hey they should tax speculation and derivative dealing

I think we all know what Gov and State Jobs need cutting

It is just our Gov and State Jobs Administrators that do NOT understand<<

When is the March on Augusta<<

I hope it is before the ONE in WASHINGTON<<

I damn sure know the next few ELECTIONS<<

Are going to bring pure HELL on Augusta and WashingTon<<

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