AUGUSTA, Maine — Maine’s economy is slowly coming back—but how long will it take? That’s a key question for businesses and state governments, as the COVID-19 recession lingers on.
It is an overriding question in state government because it looks like legislators and the governor will have to make some very tough decisions about services, pending, and taxes.
The state’s economic forecasting committee has been meeting this week to begin charting the financial future for state government. The committee is made of both state officials and private sector experts, including committee chair Ryan Low, former state Finance Commissioner and now Vice-Chancellor of the University of Maine System.
Committee members have been talking with businesses to find what sectors seem strong and what ones don’t. They’ve been trying to determine the chances for the Maine economy to bounce back to pre-COVID prosperity, and for now, they say the chances are slim.
“We are assuming a protracted, slow recovery.” said Low, “and that assumes our ability to contain the pandemic, and also assume there will be no big outbreaks requiring us to go back where we were in March.”
But he admitted there are many unknowns, such as Maine’s ability to have adequate testing for the virus, and the potential for a vaccine to prevent the spread of the virus. Those variable, and others, could have a major impact on Maine’s economy in the coming year.
The Maine Legislature may not be able to wait for all those answers. Veteran Legislators are already talking about having to make hundreds of millions of dollars in budget cuts of changes for the coming year. That includes Rep. Sawin Millett (R- Waterford), a former state Finance Commissioner under two Governors, as well as a longtime member of the Legislature. He said Thursday that lawmakers face big challenges.
“It is bad. I think we will probably see the biennium general fund and highway fund something north of $800 million.”
That kind of shortfall could require major changes, cuts or even tax increases to balance the budget in the new fiscal year that begins July 1. Legislative leaders are already speculating on a possible special session for August to begin dealing with the projected funding problems. The state’s Revenue Forecasting Committee will meet at the end of July to project how much tax revenue will be coming in, and therefore how much money will be available for state programs and services.
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