AUGUSTA – Final transactions to close out the books on fiscal 2006 left Maine’s state government with a sizable General Fund surplus but a precariously balanced Highway Fund, Gov. John Baldacci said Monday.
At a State House news conference, Baldacci outlined the year-end figures and said the numbers demonstrate effective financial management during his 31/2 years in the Blaine House.
The administration pegged the 2006 General Fund revenue surplus at about $74 million and said another $14 million in savings had been realized.
A $2.1 million Highway Fund shortfall had been offset by a transfer of money that would otherwise go toward construction projects, officials said.
“It’s not just about balancing budgets,” said Baldacci, a Democrat who is seeking re-election to a second term. “Now we need to make investments.”
Despite the Highway Find shortfall, he said, the state would move ahead with its construction schedule for the current season.
State law spells out in detail how unappropriated surpluses – a combination of revenue in excess of budget and unbudgeted savings – is used.
A state contingency fund stands to receive up to $350,000 and up to $1 million may go to a loan insurance reserve fund.
Then, more than one-third – 35 percent of the unappropriated surplus – goes to a budget stabilization fund, often referred to as the rainy day fund.
Another 20 percent goes toward paying down the state pension system’s unfunded liability – the retirement allowance fund; 20 percent more is earmarked for General Fund operating capital reserves to bolster the state’s cash flow.
That leaves 15 percent for a retiree health internal service fund, another portion of post-retirement benefits for employees, and 10 percent for a brand new capital construction and improvements reserve fund.
Republican gubernatorial candidate Chandler Woodcock, a state senator from Farmington, issued a statement sharply critical of the state of state finances but cited no specifics.
He said, “by any standard Maine’s economy is one of the worst in the country.”
According to administration officials, most of the 2006 General Fund revenue surplus came from three sources: $26.2 million in individual income taxes, $15.5 million in sales and uses taxes and $12.8 in corporate income taxes.
Budgeted General Fund revenue for fiscal 2006, which ended June 30, was more than $2.8 billion, according to the legislative Office of Fiscal and Program Review.
Baldacci said that since taking office he had been able to increase General Fund reserves from zero to $149 million and to reduce short-term borrowing from $275 million to zero while abiding by a pledge to keep from raising broad-based taxes.
He also cited government spending caps that have been put in place and said state budget increases have been the lowest in 30 years.
“There’s more work to be done, but the foundation has been laid to grow jobs, invest in Maine’s future, provide affordable health care and protect our natural resources while increasing our energy independence,” Baldacci said in a statement.
To date in the gubernatorial campaign, Baldacci has said economic growth can be encouraged by utilizing incentives offered in Pine Tree development zones, along with increased investment in research and development.
Woodcock says Maine must become more business-friendly, while independent candidate Barbara Merrill, a state representative from Appleton, has criticized Baldacci for a state budget borrowing proposal and Green Independent standard-bearer Pat LaMarche has warned that better jobs elsewhere are causing young Mainers to move away.
The race for governor is playing out against the backdrop of a referendum debate over the so-called Taxpayer Bill of Rights, known as TABOR.
The proposal would limit the growth of spending at the state, county, municipal and school district levels to the annual rate of inflation and population growth and require voter approval for any tax or fee increases.