Maine budget writers briefed on troubling revenue trend

AUGUSTA – Legislative budget writers awaiting a likely reduction in state revenue projections heard firsthand Wednesday about King administration measures to cut costs.

Both sides – the administration officials offering the examples and the lawmakers seeking more detail – agreed that such short-term initiatives can only be viewed as small first steps.

“There’s only so much we can do administratively,” said Kay Rand, top aide to Gov. Angus King, as other King aides appeared before the Legislature’s Appropriations Committee.

One month ago, King announced that by executive order he was instituting a hiring freeze and imposing other curbs on expenditures in hopes of saving about $10 million.

Administration officials said Wednesday they now hope to realize savings through such measures of perhaps $25 million.

Even that amount, however, would only offset an expected revenue shortfall for the first four months of the current fiscal year.

Some lawmakers, legislative analysts and administration officials are suggesting that the total revenue shortfall for fiscal 2002, which runs through next June, could be several times higher than $25 million.

“This is going to be very hard to do,” said Sen. Jill Goldthwait, the Bar Harbor independent who serves as Senate chairwoman of the Appropriations panel.

For what small comfort it affords, the national fiscal picture shows Maine state government is far from alone in experiencing financial distress.

Researchers at the State University of New York at Albany, N.Y., reported Wednesday that preliminary data from around the nation indicated that state revenues between July and September suffered the worst quarterly decline in at least a decade.

The Rockefeller Institute of Government report found that tax revenues fell 3.4 percent during the third quarter of 2001 compared to the same period a year earlier. The figures were based on state personal and corporate income taxes and sales taxes.

Measuring all tax lines, King administration officials say Maine’s General Fund collections dropped under budget by $33.8 million through the first quarter of the fiscal year, amounting to a negative 7.2 percent.

A 50-state survey by the National Conference of State Legislatures last week found the “harshest fiscal conditions in a decade.”