AUGUSTA, Maine — A legislative budget committee heard a whisper of good news on Thursday about the state’s financial situation.
But any optimism was quickly tempered by cautionary words about the slow recovery and warnings that Dirigo Health Agency will take longer to repay a $25 million loan from the state.
Mike Allen with the Maine Revenue Services told members of the Appropriations and Financial Affairs Committee that income for last month was $2.3 million higher than anticipated, according to preliminary numbers.
But Allen pointed out that the only reason revenues were on the positive side — after months and months of shortfalls — is the larger-than-expected response to a tax amnesty program that ended Nov 30.
Without the additional $7.2 million in late income tax payments, revenues for the month once again would have been in the red. And for the year so far, General Fund revenues remain $66.7 million below the level upon which the budget is built.
“It is certainly nice to see a positive month,” Allen told lawmakers. “But I wouldn’t read too much into that because I think we are still in for a long, tough road ahead, certainly for the rest of this fiscal year.”
The estimated revenue shortfall for the current two-year budget now stands at roughly $383 million. Factor in a $25 million shortfall carried over from last fiscal year and the gap grows to $408 million.
The Legislature will get to work on adjustments to the two-year budget when lawmakers return in January. Gov. John Baldacci is expected to release the details of his supplemental budget next Friday.
State finance commissioner Ryan Low said the $63 million budget curtailment order released last month by Baldacci did not include any layoffs and was limited to areas that could be trimmed without legislative approval. The administration felt that if there are going to be layoffs, those individuals or departments should have an opportunity to defend the positions during legislative hearings.
If it weren’t for federal stimulus dollars, the budget gap likely would be closer to $800 million than $400 million, Low said.
Lawmakers also received sobering news from administrators of the state’s Dirigo health insurance program.
Earlier this year, lawmakers extended Dirigo Health a $25 million loan to help cover costs while the program worked toward self-sufficiency. Karynlee Harrington, executive director at Dirigo Health, told the committee Thursday that the program does not expect to be able to pay back the full $25 million by June 30, as required.
“We are making progress. We have a positive cash balance,” Harrington said. While the program expects to be self-sufficient sometime in fiscal year 2011, which begins July 1, it will not likely happen before then, she said.
“We are moving in the right direction,” she said.
Harrington said more people have stayed with the Dirigo program during the recession than expected. At the same time, the insurance companies that pay into Dirigo’s accounts continue to make late payments, she said.
Rep. Emily Cain, D-Orono and co-chairwoman of the Appropriations Committee, said she was concerned to hear that the state might not be paid back by the end of this fiscal year. The committee will continue to monitor the situation and receive regular updates as lawmakers work on the supplemental budget, Cain said.
Sen. Richard Rosen, R-Bucksport, described the program as being “on absolute life support.” Rosen said some of the cost-saving changes discussed Thursday by Dirigo officials — such as requiring those who qualify for Medicare to enroll in the federal program instead of Dirigo — should have been enacted a long time ago.
“These are the types of modifications that should have been made years ago, and they were suggested years ago,” Rosen said.