AUGUSTA – With legislative budget writers already grappling with ways to secure a final $10.1 million in savings within the new $6.3 billion state General Fund budget, fiscal staff analysts are warning directly that revenue projections on which the budget relies may have to be reduced.
“The revenue picture for the first two months of fiscal year 2008 indicates some trends that do not bode well for the fall revenue forecast updates for both the General Fund and the Highway Fund,” the just-out monthly newsletter from the Legislature’s Office of Fiscal and Program Review says.
On the individual income tax line, the newsletter says, “Weakness in withholding payments indicates some slower economic growth.”
Additionally, the new analysis notes, “Sales and use tax collections were under budget by $3.2 million through August, and cigarette and tobacco products taxes continued to fall below budget.”
Additionally, the newsletter said the corporate income tax line has been under budget since the 2008 fiscal year began July 1.
The fiscal staff said September business filings are likely to provide clearer evidence but that so far “a very preliminary look at September filings indicate that there is some weakness in this category as well, which might prompt a downward revision in the fall revenue forecast.”
In the coming weeks, a regular two-step process will produce an update of revenue projections, which could give lawmakers new budget decisions to make when they reconvene for the 2008 regular session in January.
On Oct. 16, the state’s Consensus Economic Forecasting Commission meets to review and update its estimates for wage and salary employment growth, personal income growth and consumer price inflation.
Thereafter, a separate group – the state Revenue Forecasting Committee – will go over economic forecast changes and see how they affect the tax models of Maine Revenue Services, the state taxation agency.
The Revenue Forecasting Committee meets in November to update revenue forecasts for the General Fund, Highway Fund and the Fund for a Healthy Maine.
Meanwhile, after meeting for two days last week, the Legislature’s Appropriations Committee is off until mid-October for another round of discussion and review of potential savings initiatives.
The Appropriations panel has sent out a letter to leaders of other legislative committees soliciting comment on savings ideas being considered and asked that responses be made before the Appropriations panel gathers again Oct. 17-18.
The Baldacci administration has offered an $11.3 million package of proposed spending cuts. Legislative budget writers also have received several hundred proposals through a virtual suggestion box created by the Appropriations Committee staff.
“The suggestions that came in are well worth examining,” Democratic Rep. Jeremy Fischer of Presque Isle, the House chairman of the Appropriations Committee, said in a statement. “However, we need more time to determine the level of savings that these suggestions will actually achieve before we act.”