AUGUSTA – Maine lawmakers were told Monday that the state has taken in nearly $50 million in unexpected revenue, but members of the two parties disagree on what to apply it to.
Republicans say they want to use some of the money to bolster the state’s rainy day fund. Democrats say they might agree to put some of the money there, but that they would prefer to use it to reduce an $82 million shortfall at the Department of Health and Human Services, thus softening deep cuts proposed by Gov. Paul LePage.
How it all plays out will be determined by May 15, when the full Legislature returns to vote on how to balance the second year of the two-year, $6 billion state budget, which runs through June 2013.
Some of the unexpected revenue comes from an accounting error at Maine Revenue Services that overlooked $13.7 million taken in earlier this year. Higher than expected sales tax receipts, possibly due to a boost in consumer confidence, accounted for much of the rest, said Michael Allen, a deputy commissioner at Maine Revenue Services.
“We’ve started to see stores that cater to lower and middle income households show some growth,” he said.
Income tax revenues filed by the April deadline were on par with expectations in Maine. Data from other states on income taxes is mixed, Allen said.
“There’s no April surprise one way or the other,” he said. “The information from other states is all over the map.”
Appropriations Committee Chairman Sen. Richard Rosen, R-Bucksport, said Republicans want to use some of the extra revenue to beef up a depleted rainy day fund. The current balance is about $46 million, according to the Legislature’s fiscal office.
“Many of us feel it’s important and prudent to put a portion of this revenue into the Budget Stabilization Fund,” Rosen said. “We’ve depleted our reserves as we’ve been dealing with the effects of the recession.”
Rosen said he does not want to apply all of the new revenue to the DHHS shortfall. He said the new revenues are one-time funds that won’t solve the problem of excessive ongoing costs at the department, which he said are the source of the $82 million gap.
“I don’t think you should automatically assume the revenue offsets (part of that) deficit,” he said. “The issue with the DHHS shortfall is the ongoing structural nature of the shortfall, which is what we’re trying to get at.”
LePage has said he wants lawmakers to make cuts at DHHS before he will consider a state bond package that has already gained bipartisan committee support.
Last month, LePage also vetoed some line items in the budget-balancing bill that would have provided fMedicaid funding for institutional care and to cities and towns for General Assistance welfare payments. The Appropriations Committee must now renegotiate that funding, or leave it out of the budget.
Democrats say they continue to be concerned about some of the DHHS cuts, including reduced or eliminated funding for the Drugs for the Elderly Program, and a proposal to seek a federal waiver so the state no longer has to participate in the Medicare Savings Program, which also helps seniors pay for their prescription medications.
“Certainly the revenue projection today helps us,” said Rep. Peggy Rotundo, D-Lewiston. “It doesn’t totally get us there in terms of the shortfall. The proposals from the governor are irresponsible and extreme.”
State House Writer Susan Cover can be contacted at 620-7015 or at: scover@mainetoday.com
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