Maine budget panel gets dreary revenue estimates
AUGUSTA, Maine (AP) — Concerns about how Congress will act to avoid the ‘‘fiscal cliff’’ were on the minds of Maine economic forecasters before anticipated revenues were revised downward, a state finance official told lawmakers on Thursday.
Michael Allen, associate commissioner for tax policy, also told the Appropriations Committee that Maine is not alone among the regional states whose tax incomes are being eaten away by the economy.
‘‘Maine’s revenue performance through the first four months of fiscal year ‘13 is consistent with reports from some of the other New England and northeastern states,’’ Allen told the committee, which was meeting for the last time before a new Legislature is sworn in next week.
Allen said revised estimates for the current fiscal year, which ends June 30, show revenues $35 million below estimates made earlier in 2012. For the next two-year budget cycle, fiscal 2014 and 2015, revenues are reduced by $125 million. The latter figure was adjusted slightly since Wednesday, when it was estimated at $128 million.
The lower estimates mean that state government will have that much less money to authorize for general services in its two-year budget, which is about $6 billion. Allen said the main culprits are lower-than-expected sales, personal income and corporate income taxes.
In the state’s highway fund, which is separate, revenues are expected to be about 2 percent above estimates during the current fiscal year but lag below previous estimates by $20 million in fiscal 2014-15, Allen told the committee.
Maine’s Consensus Economic Forecasting Commission, an independent group of economists who prepare forecasts for the Revenue Forecasting Committee, expressed concerns in a Nov. 1 report about the ‘‘fiscal cliff,’’ sharp federal government spending cuts and tax increases scheduled to start Jan. 1, and how and when it will be resolved by Congress, Allen said.
The commission noted that its economic forecast ‘‘assumes that there will be a constructive resolution reached by the new Congress and president preventing any extensive deterioration of economic conditions,’’ Allen said, citing the report.
‘‘Given the severe impact to the economy if a solution is not successfully reached, the CEFC will re-evaluate their forecast in the first quarter of calendar year 2013 in response to actual policy decisions at the federal level,’’ the commission’s report said.
Allen said Maine’s Revenue Forecasting Committee, which recommended the downward revisions Wednesday, ‘‘has kept this key assumption in mind in updating its revenue forecast.’’