February 20, 2012 | last updated February 20, 2012 12:18 pm
Capitol Update

Money matters

Revenues slide in January

  • Income taxes fall short

  • Consumer spending worries lawmakers

The roller coaster of state revenues continues. In January, revenues were $38.7 million below estimates, raising concerns on whether the estimates made last November will need to be revised downward later this month.

"That is a concern," Finance Commissioner Sawin Millett said. "Both sales and use [taxes], the individual income and the corporate income lines were down substantially."

After starting the budget year in the red, revenues improved through the first half of the budget year and were in the black in December. Millett said the January numbers were so far below estimates that year-to-date revenues are now $29.8 million below projections.

Individual income tax fell short of January projections by $23 million, but did improve over last year. "We moved out about $15 million [more] in individual income tax refunds in January than in previous years," he said.

The corporate income tax, which has been above projections for over a year, was way off. In November, it was re-projected to bring in $12.2 million in January, but generated only $5 million. It is now $1.5 million below estimates.

Millett said it has always been difficult to accurately project corporate income taxes because some corporations file on a calendar year and others file on their own budget year. He said he was concerned to see a sharp drop in January after several strong months, but added, "It is good news that year to date we are still very close to estimates on the corporate line."

Millett said that the failure of sales tax revenue to meet modest expectations could indicate consumers are still worried about the economy and spending less. Holiday sales tax collections from December are reported in January.

"That has been one of my concerns all along," said Rep. Peggy Rotundo, D-Lewiston, the Democrat lead on the appropriations committee and a former co-chair of the panel. "The sales tax reflects consumer confidence in the economy, and it has not been strong all year."

The committee has finished work on a measure to pay the Medicaid bills for this budget year that now goes to the full Legislature for consideration. Another supplemental budget will resolve other shortfalls, and could be used to address underperforming revenues if they continue to come in below expectations.

"The January revenue report is bad news," said Sen. Richard Rosen, R-Bucksport, co-chairman of the committee. "The economic forecasts for Maine continue to signal extraordinarily slow job growth and, until we have some significant job growth, we will not have significant growth in state revenues."

State cuts threaten federal defense funding

  • State match needed to fund programs

  • Federal money could be lost this year

Retired Maj. Gen. John Libby, the commissioner of Defense, Veterans and Emergency Management, has warned lawmakers that millions of dollars in federal funds for his department are in jeopardy as state funding cuts make it increasingly difficult to meet matching-fund requirements.

"Maine National Guard facilities and operations and maintenance are shared between the federal and state governments at 75% and 25%, respectively," he said. "We are dangerously close at this point in time in terms of the state share in not meeting the cooperative agreement."

Libby told members of the Legislature's Veterans and Legal Affairs Committee that his agency relies on federal funds for a wide range of programs, and that every time his agency has to find $25,000 in state cuts to help balance the budget, he loses $75,000 in federal funds.

"If you do the rough math, we are over $300 million that we bring into the state on a $3.5 million budget," he said. "That's not a bad investment for the state, I would argue, both in terms of its service to the nation and its service to the state."

Libby said having a basic operational infrastructure in place has allowed the agency to get 100% federal funding for some programs and projects. He is concerned further reductions in state funding will jeopardize that ability.

Libby said a loss of federal funding could happen this year. "Every time we are asked to do something as simple as eliminate a maintenance mechanic because I have to find $35,000 in the budget, we put $105,000 of federal money at risk," he said.

Finance Commissioner Sawin Millett said in an interview that the Department of Defense, Veterans and Emergency Management is not the only state agency that has agreements that require the state to provide a match to receive the federal dollars.

"I am very much aware of the need to maintain our effort on all of those federal match programs that trigger substantial benefits for the state of Maine," he said. "We keep that in mind all of the time."

Libby said the expenditures for the Army National Guard in the state are roughly $105 million a year. Another $135 million a year is spent on Air National Guard programs and $60 million a year is spent by the Veterans Bureau.

Medicaid fraud bill introduced

  • Reward given for reporting abuse

  • Protections for whistleblowers

A new bill would allow Mainers who believe a Medicaid provider or recipient is defrauding the program to sue and not only get the money back for the state but also get a cash award from the court.

"Other states have this, plus the federal government has it," said Rep. Jeffery Gifford, R-Lincoln, sponsor of the bill. "It's a bill I felt was needed to be put in."

Allowing a citizen to take legal action to stop fraud has a long history, he said, adding the measure would be one more tool to stop fraud in the Medicaid program, called MaineCare. The federal government funds about two-thirds of it, while the state funds the other third.

"This gives the citizens of the state of Maine a right to file against a fraudulent claim, if they know of it, or they can…turn it over to the Attorney General," he said. "But if the Attorney General decides not to pursuit it, the individual party can do it."

He said it could be expensive to successfully pursue a lawsuit that proves intentional fraud, so it is appropriate that a private individual be able to not only recover costs of a lawsuit but also give a judge the ability to reward the individual for their action. The bill includes safeguards to make sure the measure is not abused.

The measure is drawing support from the Maine Equal Justice Partners, a low-income advocacy group. Robyn Merrill, a policy analyst with the group, said the measure will provide a useful tool to go after provider fraud, which she says is where there are significant savings to be found.

"We think this is a good bill, "she said. "It goes after fraud in the Medicaid system, and we know there is fraud."

The proposal also includes provisions to protect whistleblowers in government agencies and private companies that use the law to file lawsuits against people or providers they believe are defrauding the Medicaid system.


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