MSMA: State revenue picture improving, forecasters say

Maine School Management Association



Feb. 23, 2010

State revenue picture improving, forecasters say

The financial news is improving in Augusta with forecasters predicting state revenues will increase by $51 million over this year and next – money that would allow the Legislature to restore some of the funding  initially cut in the governor’s supplemental budget.

The improved revenues are largely being driven by better than expected corporate income tax collections and to a lesser degree by individual income tax collections. Sales tax collections, however, continue to come in below budget.

The Appropriations Committee, which got an update from the Revenue Forecasting Committee Tuesday afternoon, will now have to decide how or if to spend the new-found revenue and another $27 million in increased federal Medicaid money.

The committee was told last week that $27 million in additional Medicaid money for a subsidized drug program has been promised to Maine as part of an extension of a program in the federal stimulus package.

That coupled with the increased tax revenue adds up to $78 million, and Gov. John Baldacci is scheduled to release a proposal on how to spend all or part of that money next week.

This change package is expected to restore some of the $400 million-plus cuts made in the governor’s original supplemental budget – cuts that hit K-12 education and Health and Human Services the hardest.

The Appropriations Committee on Tuesday started to divide over how much of the money should be put back in the budget.

“I think it would put the committee in a very difficult position to have a proposal that spends that $78 million,” said Sen. Richard Rosen, R-Hancock County.

Rosen was worried that the current supplemental budget already has a $35-million placeholder in it in anticipation of even more federal Medicaid money coming to Maine. He believes part of the $78 million should be used to cover that placeholder until that additional money arrives. That is not expected until sometime in June, after the Maine Legislature has adjourned.

The governor’s Finance Commissioner Ryan Low has said that not only has the Baldacci administration been assured that the $35 million is coming, it is likely that as much as $60 million or more in increased federal Medicaid funds is on the way.

Sen. Bill Diamond, D-Cumberland County, chair of the Appropriations Committee, said the $78 million should be used to restore vital services and the additional $60 million that is coming down the road should be used to cover the $35-million placeholder.

“I hope we would not limit the good use we could put to this money,” Diamond said of the $78 million.


Contact: Dale Douglass, executive director

Victoria Wallack, communications director

Telephone: 207-622-3473  or 1-800-660-8484