Revenue shortfall to total $140M

AUGUSTA – Maine’s General Fund shortfall for the present fiscal year will be $140 million, close to the worst expectations of state revenue experts, officials said Friday as new unemployment figures reflected the worsening national economic plight facing Maine and other states.

The state Revenue Forecasting Committee accepted the recommendation of Maine Revenue Services officials that the General Fund will run short by $140 million through June. In addition, the local government fund that goes to municipal revenue sharing will run a $6.4 million deficit, bringing the total to $146.4 million.

State economists earlier had estimated a shortfall for fiscal 2009, which ends June 30, to be between $110 million and $150 million. A further refinement of the estimate was presented Friday to the Revenue Forecasting Committee, a panel of state and academic tax and economic experts, which accepted the figure.

Earlier estimates of a shortfall prompted Gov. John Baldacci to order $80 million in state spending curtailments on Wednesday. The governor plans to submit a budget revision package to the newly elected Legislature in December that will account for the remaining shortfall. So far, the hardest hit departments are Education and Health and Human Services.

Going into the next biennium starting July 1, preliminary estimates of shortfall are in the hundreds of millions of dollars. The current two-year General Fund budget totals $6.3 billion.

Meanwhile, Maine’s unemployment rate rose by 0.1 percentage point to 5.7 percent in October, 0.8 of a point higher than the state’s rate in October of last year, Labor Commissioner Laura Fortman said Friday. Maine has lost 4,000 wage and salary jobs over the past year, she said.

“Maine labor market conditions continued to weaken in October as a result of the slowing national economy,” Fortman said. “Maine businesses and workers have been affected by both layoffs and reduced seasonal hiring.”

However, Maine’s 5.7 percent rate for last month compares favorably with the national rate for October, which was 6.5 percent, the Labor Department said.