State revenue on track midway in fiscal year

AUGUSTA – The first monthly revenue report to reflect December’s upward reprojections puts state tax collections slightly above budget through the first half of fiscal 2005.

According to Baldacci administration finance officials, General Fund revenue for December topped expected levels by $3.8 million or 1.6 percent. Taking into account last month’s sizable adjustments, the administration now puts a year-to-date surplus at $5.7 million, or 0.5 percent.

The recent reprojections upped revenue estimates for fiscal 2005 by $72 million.

Commissioner Rebecca Wyke of the Department of Administrative and Financial Services, in her monthly report to Gov. John Baldacci and members of the Legislature, cited optimism about the regional economy.

“The Boston Federal Reserve Bank reports that the regional economy picked up in the final quarter of 2004,” the monthly report said.

“Holiday sales got off to a slow start, but increased significantly during the final two weeks of the shopping season. Building supply materials, both regionally and in Maine, continue to grow at double-digit rates.

“The Boston Fed reports that all major sectors of the New England economy are upbeat about 2005,” the Baldacci administration analysis said.

Last week, administration officials gave legislative budget writers a look at spending changes proposed for between now and June 30, when the fiscal year closes.

The supplemental budget proposal for fiscal 2005 looks to cover shortfalls in a variety of departments and programs, including $17 million in tax reimbursements for businesses.

On Monday, meanwhile, the Legislature’s Appropriations Committee opens public hearings on Baldacci’s $5.7 billion budget package designed to cover the two years beginning July 1.

The governor is calling for a $250 million boost in school aid and proposing to capitalize up to $40 million of lottery revenue for 10 years to generate $250 million from an investor for the biennium.

Baldacci is also proposing to stretch out a state timetable for reducing Maine’s unfunded pension liability. According to the administration, moving from a schedule of 14 years to 23 years could be worth more than $135 million through fiscal 2007.

The Baldacci package for the biennium also recognizes $94 million in higher than anticipated state revenue that was projected by the Maine Revenue Forecasting Committee in its Dec. 1 report.

Appropriations Committee hearings on the biennial budget are scheduled to run for three weeks and two additional days.

No timetable has been set yet for review of the 2005 supplemental package.