January 17, 2013

Maine revenues for December fall short of estimates

But a state official says revenues for the first half of this fiscal year are above budget estimates.

The Associated Press

AUGUSTA — State revenues were below estimates in December by $5.2 million as Christmas-season sales fell short of what was hoped for, a finance official told lawmakers Thursday.

But the state's associate finance commissioner for tax policy, Michael Allen, also told the Appropriations Committee that total revenues for the first half of this fiscal year were slightly above budget estimates.

The figures show revenues $600,000 ahead of projections for the $3 billion annual state budget that ends June 30.

Saying that Maine continues to work its way through a "challenging economic environment," Allen said overall consumer purchasing is lackluster, with the weakest area in building supplies.

He said there are some signs of resurgence, for example in auto sales, which are doing better.

"The holiday shopping season matches up a little bit with what we've seen and heard nationally, that the season didn't get off to a good start," Allen told lawmakers. "It wasn't a great holiday season, but it wasn't as bad as people were fearing."

The figures on how much the state is collecting are of great interest to the committee, which is about to begin deliberations on a supplemental budget for this fiscal year, then on Gov. Paul LePage's nearly $6.3 billion budget for the two years starting July 1.

LePage has already ordered spending curtailments to account for lower-than-expected revenues for the current year. But a big problem remains with Medicaid, in which obligations exceed available funds by nearly $90 million, Health and Human Services Commissioner Mary Mayhew told the committee.

Responding to questions from committee members, Mayhew said fundamental changes are needed to reduce costs that the department cannot meet. She acknowledged that people's lives will be affected.

"Our changes must be structural and ongoing," Mayhew said.

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