Who could have predicted the economic straitjacket states from Maine to California now find around them, with tax cuts passed in recent years, a recession or near recession looming and budget shortages everywhere? Actually, a Washington-based group modeled just such a possibility in 1999 and 2000 and found that Maine was among the best prepared because of the growth in its Rainy Day Fund. Credit for building up that fund must go to Gov. Angus King, who has been dogged in ensuring that it received additional revenues whenever possible and who defended it when legislators wanted to use large chunks for programs.

States, which cut tens of billions of dollars in taxes in the last couple of years, struggled to make expenditures match revenues last spring and were facing more difficult decisions even before the Sept. 11 attack. Since then, states like Florida and Hawaii, which are heavily dependent on airplanes full of spend-happy tourists to pay for state services, have been looking at shortfalls of between $300 million and $1 billion. Tennessee recently cut $100 million from state agencies and its governor, Don Sundquist, says he may need to cut another $100 million. Iowa Gov. Tom Vilsack recently cut $108 million in spending and Illinois Gov. George Ryan just approved $50 million in cuts. New York, of course, is struggling, though federal aid should help alleviate some of the problem there. But Virginia, Massachusetts, California and a dozen other states could well be facing budget problems on their own.

Two years ago, the Center on Budget and Policy Priorities studied how well each state was prepared for a recession in 2001 of the sort experienced in the early 1990s. The center looked particularly at state reserves, such as Rainy Day accounts, and at the exuberance with which states were cutting taxes. Its initial study found eight states – Delaware, Indiana, Iowa, Maine, Massachusetts, Michigan, Minnesota and North Dakota – could weather a recession with the help of its reserves. A follow-up study a year later found that major tax cuts in five of those states, not including Maine, put them in danger should a recession hit.

It is far too soon to say the current economy is in recession but the weakness in state revenues will make it feel like one. Maine sales-tax collections alone were off $7 million during the first two months of the new fiscal year and income taxes were down, too. So the storm clouds have gathered, thunder rolls across the hills and the first large drops have begun to fall. Here comes the rain.

This is the time to use the Rainy Day Fund, but it should be used carefully to meet essential obligations and with an emphasis on one-time expenditures that strengthen Maine’s economy over the long term. It shouldn’t be used to create new programs, but to keep existing ones from collapsing.

When Gov. King took office in 1995, the Rainy Day Fund stood at around $6 million. It hit a high of $140 million a year ago is now at $130 million, enough to keep Maine agencies operating and keep the state from cutting spending at precisely the time it needs to encourage more spending. Used wisely, the Rainy Day Fund could buffer Maine during the tough months ahead. After which, lawmakers should gratefully replenish it.