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January 23, 2012 Capitol Update

The call for help

Revenues back in black

  • Balance sheet reflects slight gains
  • Sales tax signals possible rebound

After the first six months of the budget year, state revenues edged back into the black with $8.9 million over projections, but state officials are cautious as they keep an eye on increasing energy costs.

“By and large we seem to be tracking the new and revised estimates,” Finance Commissioner Sawin Millett said. “We always carefully watch the price of home heating oil and gasoline and its impact on the sales tax if people find themselves with less disposable income.”

The sales tax is the second largest source of state revenues, expected to bring in $962 million by the end of the budget year. Millett notes so far it is barely over projections — just $763,398, or two-tenths of a percent, above estimates.

The largest source of state revenue — the individual income tax — is also just making estimates. It is expected to bring in $1.4 billion this year; and stands at $279,850 above projections, year to date.

“It is the corporate income tax that continues to drive the positive balances as it has since last spring,” Millett said. “That's even with the re-projection of revenues that was done at the end of November.”

The corporate income tax is $5.6 million above recently increased estimates, or 5.4% above projections.

“It certainly is good news but I don't think it will make the job we have to do in this room any easier,” said. Rep. Patrick Flood, R-Winthrop, the co-chairman of the Legislature's appropriations committee. “As we have seen earlier, revenues could take another dip and we will be back in the red next month.”

Rep. Peggy Rotundo, D-Lewiston, the Democrat lead on the panel, said she is worried the sales tax revenues are only slightly over estimates.

“It's clearly good news in that it is moving in the right direction,” she said. “What I keep looking at from month to month is the sales tax. Because I think that is a real measure of how Maine families are doing.”

Rotundo said it appears Maine families are still struggling and the recession is still taking its toll on many. She said when sales tax revenues start to grow, it will be a sign to her that the economy is on the mend.

Millett said while most revenue lines are slightly above or below projections, two areas are significantly below after six months. Money collected from fines and penalties owed the state is 7.6% below projections and taxes from cigarettes and tobacco is 2.6% below estimates.

E-911 fees likely going up

  • New system will expand capacity
  • Fee increase under review

Mainers and Maine businesses will see increases on their phone bills to pay for the state's E-911 system, and the fee will be extended to other communications devices under a measure estimated to yield over $900,000 a year.

“The number the PUC has put forth is 5 cents [for the fee],” said Rep. Stacey Fitts, R-Pittsfield, the co-chairman of the Energy, Utilities and Technology Committee. “But the committee will look at this and determine whether that is the right number to make sure we have the resources in the fund to do what needs to be done.”

A formal fiscal note for the measure has not been completed, but Maine Public Utilities Commission Administrative Director Karen Geraghty said her staff's preliminary estimate is that $946,308 a year in additional revenue will be raised based on current law.

The state share of E-911 costs is $8.9 million from fees on phone bills; a PUC study estimates local governments spend another $9 million a year under current law.

As committee co-chairman, Fitts is sponsoring the bill for the PUC. He said he supports an increase to fund the “next generation” of 911 emergency services but the commission will have to make its case that the proposed increase is appropriate.

The current E-911fee is 45 cents a month per land line or cell phone up to 25 lines.

A contract for the new system is being negotiated, but E-911 Bureau Director Maria Jacques estimates it will save $100,000 a month over the current $560,000 a month the state spends. She said a new generation of technology reduces the hardware needed for the system while increasing its capabilities.

Fitts said the new system will have the capacity to communicate with emergency dispatchers from iPads, other tablets and even medical equipment.

“There are devices out there like a pacemaker that can call 911 if a person is having a problem,” Fitts said. “The new system will have the ability to take those messages and get the help to the person.”

Rep. Jon Hinck, D-Portland, the Democratic lead on the committee, said it's likely some sort of fee increase is needed to pay for the upgrade, and that it's impossible to predict what new technologies may be developed to expand the reach of 911.

“Anybody who becomes a user of the system should become a contributor to the system as well,” he said. “That has to be part of the equation.”

Circuit breaker ‘fix' proposed

  • Rent relief measure questioned
  • Landlord verification considered

Sen. Debra Plowman, R-Hampden, says she wants to close a loophole that allows Mainers to file for rent relief under the state circuit breaker program while they are in arrears for their rent payments. “What we have going on now is that people are getting help to pay rent from the circuit breaker program, but they are behind on their rent and the landlord gets stuck,” she said. “It's wrong and we should fix it.”

Plowman said the current law requires Maine Revenue Services to make sure a person applying for rent relief under the program is renting, and what the rent amount is, but does not require that the applicant is up to date on their rent.

The purpose of the circuit breaker program is to help both renters and homeowners affected by high property taxes as measured as a percentage of their income. Plowman, who called the problem “ widespread,” said landlords are being “ripped off” when they do not get the rent payments they expect from tenants. Her bill would require a notarized letter from a landlord saying a person's rent was up to date as part of the application process for rent relief.

“I have not seen data to suggest that there is a problem here that needs to be solved,” Rep. Seth Berry, D-Bowdoinham, wrote in an email. The lead Democrat on the Taxation Committee, he said he would have to be convinced the legislation is needed, and that it would not undermine the goal of helping those hit by high property taxes.

“Not letting our most-burdened taxpayers use their refund for past due rent payments would defeat this purpose, and lead to more unpaid bills and unnecessary evictions,” he wrote.

Rep. Gary Knight, R-Livermore Falls, the committee co-chairman, said he supports Plowman's bill because he has heard of similar incidents of abuse of the system.

“Will this be a high priority? Not as high as others, probably,” he said.

Knight said the $93 million proposal by Gov. Paul LePage to eliminate the tax on pension income will occupy a lot of committee time.

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