Maine revenues slightly above estimates

AUGUSTA, Maine (AP) -- Maine state revenues were below estimates in December by $5.2 million as Christmas-season sales did not quite measure up to what was hoped for, a finance official told lawmakers on Thursday.

But the state's associate finance commissioner for tax policy, Michael Allen, also told the Appropriations Committee that total revenues through the first half of fiscal 2013 were slightly above budget estimates. The figures show revenues $600,000 ahead of projections for the $3 billion annual state budget.

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. But Allen said there are also 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 a begin deliberations on a supplemental budget for fiscal 2013, and then on Gov. Paul LePage's nearly $6.3 billion budget for the two-year budget cycle starting July 1.

LePage has already ordered spending curtailments to account for lower-than-expected revenues for the current year. But a big problem area remains with Medicaid, or MaineCare, in which program 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 the department cannot meet, and acknowledged that people's lives will be affected.

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