The State of Maine finished Fiscal Year 2010 with a surplus of $70.4 million. The fiscal year ended on June 30, 2010. The surplus is atributed to Governor John E. Baladacci's economic policies for Maine.
“The surplus puts Maine in a better position to address a number of challenges facing our State,” said Governor Baldacci. “We are beginning to see signs that our economy is recovering from the recession, but things remain fragile and we must be vigilant. The surplus is good news, but it’s not the end of the story.”
The surplus is the result of improved revenues, particularly in corporate income taxes and sales and use taxes, and constrained spending by State agencies.
“I am committed to rebuilding the State’s reserves,” said Governor Baldacci. “Working with the Legislature, we have put in place a frugal State budget that has controlled spending and made our State more financially secure.”
State law dictates how the surplus can be used. By law, it is allocated to the Budget Stabilization Fund, the Loan Insurance Reserve Fund at the Finance Authority of Maine, General Fund Operating Capital, the state retirement system and retiree health, the Capital Construction and Improvement Reserve Fund and the governor’s contingent account.
“The surplus strengthens Maine’s cash position and will help us avoid short-term borrowing,” said Ellen Schneiter, Acting Commissioner of the Department of Administrative and Financial Affairs. “But we recognize that we still have significant budgetary hurdles to overcome.”
Maine will face a budget gap in fiscal year 2011 of roughly $100 million if the U.S. Congress does not extend enhanced support for Medicaid. Versions of the extension have passed both the U.S. House and U.S. Senate, but agreement has not been reached on final passage.
The Baldacci administration is working on contingency plans for bringing the budget into balance in the event that Congress does not act by Oct. 1.
“The Governor has directed State agencies to identify spending cuts totaling $100 million for inclusion in a potential curtailment,” said Schneiter. “Ideally, we would continue to build our reserves, but the 2010 surplus provides more options as we deal with the immediate issue of replacing the anticipated Medicaid dollars.”
“We are watching revenues and the economy closely,” added Schneiter. “If the economy continues to meet or exceed expectations, our options will expand. We are optimistic based on the finish to the last fiscal year, but we will continue to prepare for other scenarios.”