AUGUSTA, Maine — Preliminary reports for September indicate state revenues failed to meet estimates for the third month in a row, triggering Gov. John Baldacci’s budget cuts in his own office and the start of the emergency budget curtailment process.
“The cumulative total is still behind of the three months year to date” in fiscal year 2009, Baldacci said in an interview. “We had to start the process to get ready for the storm. It is going to get worse before it gets better.”
In a statement Friday, the governor said revenues were down about $6 million for the first two months of the budget year. In an interview he acknowledged he had received a preliminary revenue report that showed more red ink in September.
“They are preliminary. Maine Revenue Services has not done its analysis,” said Finance Commissioner Ryan Low. But he said he did not expect any major changes in the numbers from the state controller based on revenues recorded by the controller’s office computerized accounting system.
A memo containing the September figures indicated revenues were below estimates by $3.8 million for the month, bringing the red ink for the first three months of the budget year to about $9.8 million.
The summary indicated the individual income tax, the largest single source of state revenue, was above estimates by $9.5 million in September, nearly wiping out the deficit in that tax line for the first two months of the year.
Maine Revenue Services had cautioned that some of the earlier red ink for the income tax was the result of a timing issue on collections and that the payments under the property tax circuit breaker program and the business equipment tax reimbursement program were above estimates. The analysis of those items will be given to lawmakers later this week.
Several other tax revenues were below expectations. The sales tax, the second largest source of state revenues, was under budget by $2.3 million in September, and the corporate income tax was down $9.7 million during the month, nearly 24 percent below estimates.
Smaller revenue sources were mixed. Estate taxes and tobacco taxes were down while lottery revenues and insurance company taxes were doing better than projected.
Baldacci said the revenues were not the only factor in his decision to start the process to immediately reduce spending to get through the current budget year, which ends next June.
“Given the turbulence in the economy I am hearing about from my Council of Economic Advisers, I thought it was prudent we take immediate steps,” he said.
Baldacci said his advisers, mostly prominent business leaders, said the credit problems nationally are affecting companies in Maine and that state revenues will suffer from fewer consumer purchases and from a lack of business growth.
“What I am starting to do today is to make sure we keep the budget in balance through next June,” he said. “We can’t wait to start the process when the Legislature comes back.”
Last month, Baldacci ordered all state agencies and departments to make contingency plans for a 10 percent reduction in their budgets for fiscal 2010-11, which will start July 1, 2009. He said not all plans would be acceptable to him, let alone to lawmakers, but with revenues certain to be less than expected in the next two years, there will have to be cuts.
The curtailment order that the governor is having Low prepare is the second within a year. Last December, Baldacci ordered $38 million in spending reductions with the bulk of the cuts applying to human services and education programs.
“We are already consulting with the Attorney General’s Office” on the cuts, Baldacci said.
The governor’s emergency budget authority does not require across-the-board cuts, but does require they are “equitable,” and the legal interpretation of that word has been a matter of contention for decades.
Legislative leaders are not surprised at revenues failing to meet estimates or the governor’s decision to start the process of curtailing spending this year. House Minority Leader Josh Tardy, R-Newport, said lawmakers will face tough budget decisions and that the governor was right to move to cut spending sooner rather than later.
“I hope that better times are coming, but I think we have to brace ourselves for even another downturn in revenues,” he said. “I think we know, on both sides of the aisle, that we have tough decisions coming.”
Senate Majority Leader Elizabeth Mitchell, D-Vassalboro, said the economic downturn and the immediate budget cuts do not relieve lawmakers of the more fundamental budget changes they will have to make in the January session for the next two-year budget.
“There comes a point where you can’t continue to ask the same people to do more with all the budget cuts,” she said. “We have to look at what is important, what has to be done. So yes, we have to look at eliminating programs, not just cutting them.”
The state economic forecasting commission meets this month and its report will be used by the revenue forecasting commission next month to reproject state revenues. Revenues were last reprojected downward in June.
On 10/13/08 at 5:41 AM,
Govt2Big wrote:
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Wow, Governor John "Spend and Tax" Baldacci is finally thinking about the Maine taxpayers. He's going to make some cuts, but will he stop all of the wasteful spending like that fancy new water fountain outside the capital? All of those excessive fountain and landscaping dollars should have been used for something that would have help Maine residents, such as bridge repair. What are they thinking?
Fortunately, we taxpayers now have a great new resource to examine all of the different ways in which our state leaders are wasting countless tax dollars. For example, a quick search on http://www.maineopengov.org will reveal 37-pages of names within the Executive Branch that earned $60,000+ in 2007. It's time for the Maine taxpayers to how our money is really be spent. It's time for all of the fiscal waste games to stop!
On 10/13/08 at 6:16 AM,
Coolfusion wrote:
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I'm sure that the Maine University system will be focusing hard and fast on the massive subsidies lavished on the Maine Maritime Academy. The $8,000,000 in taxpayer expenditures spent on educating aggressively recuited out-of-state students (that leave and never return after graduation) and the $1,600,000 2007 illegal purchase for a new mansion for the president will be scrutinized by those in the education sector being hard hit by cut-backs. Ya, like the MMA needs a $million plus alumni center for 200 students graduated each year. NOT !!!
On 10/13/08 at 7:10 AM,
Knightscross wrote:
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Better get use to it Baldy. It is going to get a lot worse. You can't depend on tourists to balance a budget. Maine is Bankrupt.
On 10/13/08 at 8:21 AM,
Thinkaboutit wrote:
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It's a shame that CITY MANAGER ED BARRETT of Bangor doesn't get the same message..Revenue's are down - MONEY IS TIGHT
On 10/13/08 at 8:21 AM,
Thinkaboutit wrote:
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It's a shame that CITY MANAGER ED BARRETT of Bangor doesn't get the same message..Revenue's are down - MONEY IS TIGHT
On 10/13/08 at 8:22 AM,
Thinkaboutit wrote:
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FIRE ED BARRETT -
On 10/13/08 at 8:46 AM,
downbeat wrote:
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No suprise here and nothing will happen with the legislature made up of retired teachers who have an axe to grind and never made a payroll and college grads who have no life experience. The public sector is much better paid than the private sector in pension and health insurance for life. That is where the cuts need to take place.
On 10/13/08 at 8:57 AM,
Bangorian wrote:
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This is nothing. Wait until the Federal gov't starts to really feel the pinch of the slow-down. Then we're going to start seeing the real cuts - 10% isn't even close.
On 10/13/08 at 10:09 AM,
mariahstorm wrote:
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well, i guess baldacci got a note from washington...... too bad he can't think on his own...but have you met the people in his camp????
it isn't a wonder why our legislators get nothing done.... wow! they spend 100 hours a year on gov. stuff.... common folks are working 60 to 70 hours a week just to survive the basics in life..... tell baldacci that maine maritime spending should STOP immediately... and wasn't there another project they were spending thousands on....? since when does a president of anything Have to live in a million dollar home?????? this smells!
On 10/13/08 at 12:39 PM,
Philster wrote:
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When the state leased the liquor business they received $125 million for 10 year lease which is $12.5 million PER YEAR. Profit sharing is also included which was only $5.5 million for 2007 according to the Bureau Of Alcoholic Beverages. This money goes to the general fund.
When the state had liquor stores the average money that went into the general fund from 1986-2004 was $28.8 million PER YEAR. It was $1,713,348 in 2005 and $25,653 << not a misprint in 2006.
And you wonder was the state has no money.
On 10/13/08 at 1:14 PM,
frostheev wrote:
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Fire everyone who makes over $90,000 in salary from the state government!
Then fire the legislature!!!...wishful thinking i guess!
On 10/13/08 at 2:03 PM,
SkyCop_1969 wrote:
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Here's my "When I'm elected Governor" speech. First of all, all these bond issues that the uniformed voters approve? Goodbye! No more taxpayer money to refurbish the old Coast Guard wharf in Portland, no more walking and biking trails for Portland, no more rail service upgrades for Portland. People....READ THE BOND ISSUES before approving them. If we don't have the money in hand, we don't need the improvement. Second...DHS has no reason to drive around in Dodge Durangos. Give them a Ford Focus. Better yet, for the price of a Durango, they can be given an electric car. No more gas bills. Third (idea credited to Philster) re-regulate the liquor industry. Let the state get back into the business. Why should NH reap the rewards in this? We'll undercut their prices, and then New England will come to Maine for their spirits. Fourth...We'll legalize and regulate the marijuana industry. As the only mass producer of this ridiculous weed, we'll make a fortune (until other states follow our lead). Goodbye Sales tax, income tax halved. Property tax halved. Fifth...remove all but 25 cents of tobacco taxes. The influx of the rest of New England coming to Maine to escape paying their own tobacco taxes will more than generate what was originally lost.
I'll be retired from the military soon, keep me in mind for governor!
On 10/13/08 at 3:59 PM,
Johninphilippines wrote:
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What's "The Sloop John B" up to now? How is he getting out of this mess come April 2009?
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