AUGUSTA – Although the state’s 2004 fiscal year began on a positive note Tuesday, Gov. John E. Baldacci signed a new executive order extending a number of austerity measures that have been in place since last year.

Cautiously upbeat, Baldacci said the state closed the 2003 fiscal year Monday with an apparent surplus of nearly $20 million, with more than half of the unanticipated revenue derived from increased insurance premiums paid by Maine residents and businesses.

In accordance with legislation passed last month, 40 percent of the surplus money will be assigned to paying down the debt in the Maine State Retirement System, 40 percent will go to the Budget Stabilization Fund, and the remaining 20 percent will be divided among other smaller accounts that include the governor’s emergency contingency fund and a revolving loan account administered by the Finance Authority of Maine.

Still, sales taxes were down by $4.2 million in 2003, as were revenues from other accounts such as public utilities and cigarette taxes. In an effort to cope with a continuing slow economic recovery, Baldacci invoked cost-savings measures for fiscal year 2004, which began Tuesday, that hold travel expenses, overtime and new hiring to an “absolute minimum.” While several of the restrictions in the governor’s special budget and expenditure order already were in place, the hiring provision actually reflected a softening of practices. Until Tuesday’s executive order, a full hiring freeze had been in force.

The measures are in keeping with the governor’s strategy to carefully guide the state toward a stronger economic position in the months ahead. The administration was buoyed by forecast revenue growth in the new fiscal year that anticipates increases of 3 percent in sales taxes, 5 percent in individual income taxes and 2 percent in corporate income taxes. Meanwhile, Maine’s favorable bond rating has remained unchanged and statewide unemployment continues to hover at an average of 4.5 percent – 1.5 percent less than the national average.

“But we’re still not out of the woods yet,” Baldacci said. “We’ve got to be frugal and we’ve got to practice oversight in terms of the state’s resources.”

Although rainy and unseasonably cold weather marked the arrival of the tourist season in Maine, Baldacci remained optimistic about the prospects for Maine businesses relying on out-of-state dollars for their survival.

“The majority of [the tourism impact] doesn’t come in until after July 4,” the governor said. “I think we have taken some hits in terms of the weather and the pre-Fourth incoming traffic. But we still have July and August and our foliage season – which we will be promoting heavily.”

Meanwhile, internal and independent investigations continued into bookkeeping practices at the state Department of Human Services and the Department of Education. Under a $100,000 state contract, the international accounting firm PricewaterhouseCoopers is working with DHS to track $18.9 million in federal welfare funds that apparently were dispersed without proper documentation. The governor said he was confident fraud or theft were not issues in the investigation and that the probe only underscores the need for more stringent accounting controls throughout state agencies.

He and other administration officials were less forthcoming about a separate review being conducted on the Department of Education. They offered no comment on the status of an investigation of the department’s migrant worker program by the federal Office of the Inspector General. Since May the agency has been looking into whether the federal government was billed improperly for educational services delivered to children who did not qualify as dependents of migrant workers.