AUGUSTA – As members of the state Revenue Forecasting Commission scrutinized new economic data Wednesday, Gov. Angus S. King was preparing for a budget deficit that could exceed $230 million.

The commission was weighing the latest predictions for personal income growth and capital gains in an effort to project state tax revenues for the current fiscal year that ends June 30, 2003, as well as for the next two-year budget cycle that will begin July 1, 2003. Laurie LaChance, state economist and commission chairwoman, said her six-member panel will offer its final recommendations to King and legislative leaders on Aug. 28.

Meeting with reporters Wednesday, the governor said that although state revenues for July were up overall by 3.4 percent, or $6 million, it was difficult to predict whether Maine’s economy would maintain that pace for the next 11 months.

“I never claim victory on one month’s data, so we’re not breaking out the champagne, but if I have to choose between being ahead or behind in July, I’ll take ahead,” King said.

The governor was forced to deliver a revised supplementary budget package to the Legislature in June after it became apparent that stock market losses had dramatically decreased the state’s expected revenues from capital gains taxes. Those losses were cited by the governor as the largest single factor responsible for the $180 million budget deficit identified in June. Since then, some economists have predicted that capital gains declines will continue to mount and that the overall economy will slow.

Michael Allen of Maine Revenue Services told commission members Wednesday he anticipated diminished state receipts for fiscal year 2003 of $19.8 million in the sales and use tax, $5.3 million in the corporate income tax, and $143.4 million in the individual income tax, about $100 million of which could be chalked up to capital gains losses. Those assumptions, he said, would increase revenue declines for King by $50 million over the current budget cycle.

LaChance and her fellow panelists will consider Allen’s estimates along with other information received Wednesday. When the commission reconvenes on Aug. 28, she said the actual projection could surpass the $230 million figure or it could be less. One area she will watch closely is auto sales, which could provide an unexpected spike in revenue because of ongoing zero-percent financing incentives offered by Maine car dealers.

“Automobile sales are a huge part of sales tax revenues – about 20 percent,” she said. “Will these automobile sales ever slow down? We keep thinking that they’re going to, but they don’t. We’ll be taking another look at that later this month.”

The governor and legislative leaders are waiting for the commission’s Aug. 28 revenue projections to begin the process of reviewing King’s supplemental budget package. King conceded adjustments would certainly have to be made to his original package which was based on a projected $180 million deficit. His initial proposal included a series of unilateral spending cuts, hiring freezes and furlough days.

Without revealing specifics of how he plans to address the larger projected deficit, King said the remedies are not expected to include new or temporary taxes.

“Still, I would have to say that everything’s on the table, but that doesn’t mean that we’re actively looking at [local education] cuts,” he said. “I cannot make firm promises because I don’t yet know the magnitude of the number. … I think some people say ‘why can’t they can’t get it right up there in Augusta? Why can’t they figure it out?’ It’s very difficult to get a firm handle on what’s going on.”