RISING REVENUE TIDE

The very good news this week about Maine’s higher-than-expected forecasted revenues is reason for relief, but not new expenditures. More important than the money, however, is the sign that Maine may be slowly recovering from a prolonged case of budget blues.

The Revenue Forecasting Committee predicted the state would see an additional $164 million in the 2006-07 biennium, with most of the money coming in one-time revenues this year, followed by increases of about $50 million in ’07 and in the subsequent two years. The higher spending still leaves expected structural gaps of between $200 million and $250 million beyond this biennium, but it suggests that Maine lawmakers may have a chance to shape the budget absent the kinds of crises that has burdened it since 2000. Next year is a gubernatorial election year so it would be naive to expect comity in the Legislature, but perhaps a battle over borrowing plans could be avoided.

More good news is that the increased revenues are in part the result of higher corporate and individual income earnings, suggesting business is good. According to Gov. John Baldacci, income growth in Maine currently is exceeding growth in government spending, which should further reduce the state’s overall tax burden. Investment income is up as well, another sign of better times.

About $35 million of the increased revenue this year will go to the budget stabilization fund, as required by statute, raising that fund and the state’s operating reserve fund above $100 million, a major shift over the last couple of years when those funds were just above zero.

Some of the remaining money is already earmarked for supplemental requests. For instance, increased costs within public schools will require a $20 million increase in state funding this winter and yet another audit at the Department of Health and Human Services shows that Maine owes the federal government $12 million. Those DHHS audits aren’t all completed yet either – another one in targeted case management may show even higher costs.

Fuel assistance will be high on the list too. The Low Income Home Energy Assistance Program has been promised another $5 million from the state because of high energy costs and services such as the state troopers and marine patrol that need fuel to provide public safety and will also likely require more funding. Then there are cuts made last session that were carried out not because programs were not worthy but because of a lack of funding – there is several times the additional money forecasted in previous cuts.

Maine has had five years of difficult budgets and the loss of crucial services to the poor and needy. The money in the new forecast can’t come close to replacing those services but it does suggest the state may have room now to shape its budget without being forced into more service cuts it otherwise wouldn’t make.