Governor renews calls on feds to provide states with flexibility to use funding

Mon, 04/27/2020 - 12:17 pm

AUGUSTA — Maine’s Consensus Economic Forecasting Commission and Revenue Forecasting Committee are to convene off-cycle to examine the economic ramifications of COVID-19 on the state government’s revenues.

The committees will meet in July and August, in advance of and in addition to the statutory dates currently set for November and December, respectively.

The CEFC and RFC are responsible for projecting revenues that the Administration and Legislature then use to determine the State’s budget.

This follows other steps the Legislature and governor’s office have taken, including the revision and enaction of a supplemental budget.

The $73 million revised proposal prioritized initiatives related to COVID-19. The current projected balance of unappropriated surplus is $113 million over the biennium, according to an April 27 news release from the office of Gov. Janet Mills.

The Budget Stabilization Fund, or Rainy Day Fund, through the enacted supplemental, stands at $257 million, the release said.

In other fiscal actions announced April 27, Governor Mills instructed all departments of state government to freeze all non-emergency spending and hiring. And, she is renewing her calls for the federal government to provide flexibility for states to use federal funding for expected revenue shortfalls.

“There is no question that the virus is impacting state revenues; the real question ultimately is by how much?” said Governor Mills, in the release. “The Legislature and I have taken steps to safeguard Maine’s economy, but federal partnership will be important moving forward. As a member of the National Governors Association, I am urging Congress and the Administration to provide additional direct support to states as well as flexibility with funding already authorized. All states are going to face reductions in revenue as a result of this virus. We need flexibility with funding in order to continue to protect the public health and safety and to spearhead an economic recovery.”

Department of Administrative and Financial Services (DAFS) Commissioner Kirsten Figueroa, Maine State Economist Amanda Rector, and DAFS Associate Commissioner for Tax Policy Mike Allen believe that the July and August timeframe will allow for the CEFC and RFC to more accurately understand the economic ramifications of COVID-19 on Maine’s economy and the State budget, rather than attempting to gauge it earlier and obtaining a partial and inaccurate picture, the release said.

Additionally, Governor Mills instructed all departments to apply an emergency basis scrutiny to spending and hiring.

This includes freezing unencumbered balances for Fiscal Year 2019 and certain reserves in Fiscal Year 2020, as well as reviewing contractual obligations through the remainder of the Fiscal Year, which ends June 30.

The Governor has also prohibited state employees from traveling out-of-state on state business.