Catching a break
Revenues beat projections
- Requests for extra funding roll in
- Lawmakers remain wary
Revenues are nearly $26 million above estimates for the first quarter of the state budget year, but some important income sources are barely meeting projections as supplemental spending requests mount.
“Both [sales tax] growth rates — what we budgeted and what we are seeing going on out there — are very slow,” said Mike Allen, director of research at Maine Revenue Services. “We’re kind of at the bottom, kind of moving along the bottom. The next thing we will look for is a surge out of that bottom but I don’t think we are anywhere near that quite yet.” Sales taxes barely met expectations in September, largely due to a mistake in projecting car sales, Allen said.
A year ago, state revenues were plummeting, with October 2009 revenues down by $26.8 million and total projections of red ink as high as $400 million. Revenues from all sources appear to have stabilized, according to Allen, but members of the Legislature’s appropriations committee remain wary. “We are above budget projections that are a billion dollars lower than they were just two years ago,” said Rep. Emily Cain, D-Orono, co-chair of the committee. “When you put it in perspective, we are doing better than we were, but we are not out of it yet.”
Requests are already stacking up for any extra cash that accrues in the next few months. The Department of Health and Human Services says it needs about $35 million to get through the current budget year, even with some reductions mandated by the governor’s curtailment order. “Most of that is the change in the Medicaid match rate,” said DHHS Commissioner Brenda Harvey. “That’s pretty much the only thing we allowed our office directors to really put forward.”
Congress extended an enhanced Medicaid match rate for another six months, and the state’s contribution to the program will increase significantly when that rate runs out next spring. The state’s share increases by just more than $23 million during this budget year.
Another “must do” category of requests is funding for the state’s two psychiatric facilities, Dorothea Dix in Bangor and Riverview in Augusta, Harvey said. The two need $3.4 million to get through the year.
The Department of Corrections, meanwhile, is requesting nearly $2.5 million in additional appropriations to get through the current budget year, with food, fuel and utilities costs making up more than half of the total.“The supplemental [budget] really is to address very, very basic operational costs,” Associate Corrections Commissioner Denise Lord said.
“These are cost increases we have all seen when we go to the grocery store,” she added.
Any request for additional funds are sure to face intense scrutiny by the new Legislature and governor.
FairPoint seeks penalty reduction
- PUC levies fines for poor service
- Co. cites improvements
FairPoint Communications has asked state regulators to reduce the penalties it faces for service problems following its 2008 purchase of Verizon’s landline phone service.
When FairPoint bought the landlines, it agreed to abide by a formula set for Verizon that determines penalties imposed by the Public Utilities Commission in the event that service quality standards are not met. “We are not asking for them to waive the penalties,” said FairPoint spokesman Jeff Nevins. “But we are asking them to waive the multiplier effect that was put in effect before FairPoint was the owner of the landlines here in northern New England.”
Public Advocate Richard Davies said his office is reviewing the petition filed last month, which asks the PUC to change the formula for setting penalties for inadequate service. “The reality of this is that it all goes back to the company that they hired as their contractor to replace the old Verizon system,” he said. “This mostly goes back to that cutover when there were a lot of problems for a lot of people.”
News reports were full of stories in 2009 about FairPoint customers who could not get phones repaired, add phone lines or get Internet service installed. Both residential and business customers complained that they could not reach customer service, or when they did, could not get a firm repair or installation schedule.
“We recognize that our systems transition did not go very well,” Nevins said. “We are showing now that we are making significant improvements in our service quality. In our filing, we show that we are doing considerably better than the standard they have set for answering the phones and responding to make repairs and the like.” Nevins said the use of the multipliers doubles the penalty amount, which is unwarranted given the progress the company has made this year.
“I think the penalty is about $10 million,” Davies said. “I haven’t seen any figures on that. I can certainly understand why they are seeking to reduce the penalty; I would if I were in their management and trying to come out of bankruptcy.” FairPoint filed for bankruptcy in 2009 and filed its reorganization plan in February.
DOL tracks ‘discouraged’ workers
- Data shapes outreach efforts
- Baseline jobless rate remains volatile
Every month, the federal Bureau of Labor Statistics surveys households across the country to determine the unemployment rate. But it collects data about much more than just the monthly headline measure on how many people are out of work or looking.
The 2,200 households surveyed in Maine last month also responded to questions such as whether they were “discouraged,” or hadn’t looked for a job in the last month but had sought one in the last year. Nationally, 65,000 households were surveyed. “It is very important to us to have the alternative measures to look at,” said Labor Commissioner Laura Fortman. “They give us a more complete picture of what is happening in the work force.”
The alternative measures are helpful in planning the state Department of Labor’s various outreach efforts to workers who have lost their jobs, she said. “We try to reach out to workers that have lost their jobs before they become discouraged workers,” Fortman said. “We try to call every person on unemployment in their first five weeks of benefits to talk with them about career centers and what we can offer for help.”
The broadest jobless measure estimated 15.2% of Mainers were unemployed or underemployed at the end of June, the most recent number available. “It also measures those that are part-time workers but are looking for full-time work,” said Glenn Mills, an analyst with the Maine Department of Labor. Many workers have seen their full-time jobs reduced to part time in the recession, he said.
In September, the state unemployment rate was 7.7%, a measure of those who reported being out of work and looking for a job. While it is good news that the measure is down from 8% in August and 8.1% a year ago, Fortman said she’s not ready to declare a trend. “That measure has been volatile this year, and that volatility may not be over,” she said. “Let’s look at what happens over time.”
Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz. Read more of Mal’s columns here.
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