AUGUSTA — Nearly $50 million in unexpected state revenue will ease the pressure of budget negotiations moving forward, but the parties may well be headed in different directions.
Republicans say they want to take at least some of the money and put it into the state’s rainy day fund. Democrats say they may agree to sock away some for later, but that the money should be used to blunt deep cuts to social services recommended by the governor.
How it all plays out will be determined between now and May 15, when the full Legislature returns to vote on a budget to bring the second year of the two-year, $6 billion budget into balance.
On Monday, the Appropriations Committee got good news with the revenue reprojection, part of which is the result of an accounting error at Maine Revenue Services that failed to recognize $13.7 million in revenue earlier this year. Also, an apparent increase in consumer confidence drove sales tax receipts higher than expected, 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.
Tax revenue filed by the April deadline were on par with expectations, although Allen said feedback from other states shows some with revenue way up and others way down.
“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 money to beef up the state’s 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 and others are negotiating a budget to address an estimated $82 million shortfall at the Department of Health and Human Services. He said it’s important to realize that the $82 million gap represents ongoing costs at the department, and the new revenue is a one-time gain.
“I don’t think you should automatically assume the revenue offsets (part of) the 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.”
Gov. Paul LePage has said he wants lawmakers to make some of those cuts at DHHS before he will consider a bond package that’s already gained bipartisan committee support. Last month, LePage also vetoed some line items in the budget that provided funding to cities and towns for General Assistance welfare payments. Those are now back on the table for the committee to consider.
Democrats say they continue to be concerned about some of the 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.
There are also proposed cuts to the tobacco settlement fund and Head Start.
“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.”
Susan Cover — 620-7015
scover@mainetoday.com
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