You can’t count on me

Politics + Other Mistakes
By AL DIAMON  |  October 24, 2012

Under former governor John Baldacci, a Democrat, state revenue projections were calculated by a panel known as the Consensus Economic Forecasting Commission. To be appointed to this august body, potential members had to demonstrate they had the math skills of a chipmunk.

Current Republican Governor Paul LePage has apparently decided to maintain those same high standards.

To explain what's wrong with the way Maine government figures out how much money it'll take in, it's necessary to dredge up a little history.

In November 2005, the economy was growing slowly. The commission, possibly suffering from the aftereffects of a meth-fueled weekend at a Kennebunk Zumba studio, announced that tax receipts for the next 18 months would run $164 million higher than previously predicted. Sixty days later, state officials admitted those figures might've been a tad optimistic. Projections were reduced by $35 million.

By then, the $35 million (which hadn't been collected yet) was already being spent. The first of many budget revisions was required.

In February 2006, the expert economists decided they hadn't been as far off the mark as they originally thought. The state only needed to reduce spending by $9 million to $13 million. Another budget reworking and the fiscal year ended in June 2006 with a small surplus, which Baldacci and the Legislature promptly spent.

Buoyed by this success, commission members decided revenues would grow $181 million over the next two years, a number they later increased to $270 million.

By early 2007, income was falling below expectations consistently. The group said it might have to curb its enthusiasm to the tune of $34 million. A month later, revenue for the preceding 30 days came in $34 million below estimates. Undeterred, the panel met in May and raised its guess on the annual take by almost $20 million.

No way this party was coming to an end. Not as long as those budget revisions kept happening.

The state ended the first month of fiscal year 2008 more than $8 million in the red. And that trend continued until November, when commissioners decided they should do a little reassessing.

"We know it could get worse," Baldacci told Capitol News Service, "but we won't know how bad until the panel meets and analyzes what is happening."

The commissioners tinkered with the statistics. The Legislature again rewrote the budget. And the state managed to finish the year with just enough black ink to pay for essential services. Fiscal year 2009, however, began with a different hue: three straight months of solid red. Timing issues, said the experts. This stuff will straighten itself out.

By March, the shortfalls were averaging more than $20 million per month. The commission downgraded its estimates, and another retooled budget was hastily passed, showing a $26 million positive balance. By May, all of that was gone, and Baldacci had to dip into the Rainy Day Fund to avoid a $25 million deficit.

"I think we're very concerned that it's a trend," state Finance Commissioner Ryan Low told the Appropriations Committee.

The projected shortfall for the new year: $80 million.

The commission's response: Let's not be hasty.

Three months later, the underage already totaled over $42 million.

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  Topics: Talking Politics , John Baldacci, Consensus Economic Forecasting Commission, Paul Lepage,  More more >
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