Budget panel projects $164M revenue boost

AUGUSTA – A state forecasting panel that helps frame Maine’s budget debate endorsed a major upward revision of revenue Monday.

The all-but-final decision, which must be fleshed out in a formal report to the Legislature by Dec. 1, would buoy the General Fund with an additional $164 million.

The decision by the six-member state Revenue Forecasting Committee relies primarily on stronger than expected gains in individual income and corporate income taxes.

“We’ve essentially agreed,” said committee Chairman Jerome Gerard, the acting state tax assessor, after a six-hour meeting at the State House.

The upward reprojection would be for $112 million in the current fiscal year, which runs through June 2006, and $52 million dollars in the subsequent 12 months, which would be fiscal 2007.

Higher projected revenue could help the Baldacci administration and state lawmakers address various budget issues, including funding within the Department of Health and Human Services.

Gov. John Baldacci said the panel’s expected action reflects a strengthened state economy that he attributed in part to administration initiatives such as Pine Tree economic development zones and advances in Maine’s community college system.

“It’s a positive. It’s something we certainly welcome,” Baldacci said.

At the same time, the governor suggested that state government still faces budget challenges, not least because of what is taking place in Washington, D.C.

“We’re in a situation where we have to make up what the federal government isn’t doing,” said Baldacci, a Democrat who served for eight years in the U.S. House of Representatives before becoming governor three years ago.

Earlier this month, the agenda for the Baldacci administration’s third Cabinet retreat included the state’s Dirigo Health program championed by the governor, economic development, budget priorities and energy.

Last week, Baldacci and House and Senate leaders from both major parties announced an agreement to make the appropriation of $5 million for fuel assistance for the needy the first order of business when the Legislature reconvenes in January.

In the most recent report to the governor and Legislature, administration budget chief Rebecca Wyke said General Fund revenue for the month of October exceeded projections by $9.5 million, or 4.3 percent.

That put a year-to-date surplus at $61 million, or 8.3 percent, although a substantial amount of that was linked to timing that made the surplus appear larger than it probably is.

In June, Baldacci signed a bill to replace a controversial borrowing plan with a $250 million combination of spending cutbacks and higher tobacco taxes.

The bill addressed a borrowing provision that had come under fire from virtually all sides since its late March passage – by Democratic House and Senate majorities – within a $5.7 billion two-year spending plan for state government.

A people’s veto petition drive – led by Republican lawmakers and activists – had been under way and lawmakers from both major parties, along with Baldacci, called for repeal and replacement of the borrowing plan.