January 13, 2004 

TO:            Governor John E. Baldacci

                  Members, Legislative Council
                  Members, Joint Standing Committee on Appropriations

                  Members, Joint Standing Committee on Taxation

                  Members, Joint Standing Committee on Transportation

FROM:       Revenue Forecasting Committee

RE:            Interim Revenue Adjustment 

            At the request of the State Budget Officer, the Revenue Forecasting Committee (RFC) revised the Other Revenue line in its fiscal year 2003-04 General Fund revenue forecast upward by $2,066,000.  It is not a common practice for the Revenue Committee to recognize revenue in between our official December 1 and March 1 forecasts, however, due to unusual and unanticipated events and the fact that revenues related to these events have already been received, the RFC decided revision was warranted prior to its next scheduled meeting in February. 

            The sale of the Maine Mall for $265,000,000 generated a Real Estate Transfer Tax payment of $1,166,000.  This payment was received and recorded in the Other Revenues line in November of 2003.  

            In December of 2003 the Bureau of Insurance within the Department of Professional and Financial Regulation, announced assessment of a fine against CIGNA Healthcare of Maine, Inc., and CIGNA Behavioral Health (collectively “CIGNA”) in the amount of $900,000 for multiple violations of Maine law related to failure to pay claims on time.  The payment of this fine was received in late December. 

            In recognizing these unusual revenues, the RFC acknowledged that revenues have been performing well and are ahead of projections through the first half of the fiscal year.  We are not aware of any events of a negative nature that would impede the realization of budgeted revenue.  However, the Consensus Economic Forecasting Commission will meet to revise its economic forecast ahead of the next revenue forecast.  Any changes to the economic forecast have a much larger effect on revenues than the events described above and would mean revising revenues in whatever direction the economic changes might indicate. 

            If you have any questions, please feel free to call me at 287-1479, or any Revenue Committee member.  The Consensus Economic Forecasting Commission will reconvene on January 27^th to review and, if necessary, revise the economic projections.  The Revenue Forecasting Committee will meet in late February to review and, if necessary, revise revenue projections.