The state's Revenue Forecasting Committee met last week and reduc-ed their projection of state revenues by an additional $95 million. The latest action by the forecasting committee brings the state budget gap to nearly $200 million.

  Tax revenues are falling behind projections in nearly every area in-cluding sales taxes, personal income taxes, corporate taxes, fuel taxes and cigarette taxes. Experts point to negative economic trends caused by the housing slump, inflation and the tightening of credit as factors which have slowed the economy and will hold back future tax collections.

  The nearly $200 million budget hole includes an estimated $28 million that was booked from the seizure of a    portion of unused gift cards sold by out-of-state retailers. The collection of such funds was a risky policy assumption that has left the state in a position in which none of the expected funds were received.

  The Governor is expected to re-lease a revised supplemental budget in which he will lay out his strategy to close the current budget hole. The Legislature will then be charged with drafting and enacting a final budget fix.

  It is important to remember that the current biennial budget increases spending over the last one by more than $470 million. If we cut the current budget by $200 million, we will still be spending over $270 million more in this fiscal biennium than in the last.

  The Bush Administration an-nounced recently that it will release an additional $40 million in emer-gency heating aid to states. The figure will include roughly $3.8 million for needy residents in Maine.

  The additional funds will be provided through the Low Income Home Energy Assistance Program (LIHEAP), which helps income-eligible residents purchase heating oil for their homes. The increased relief is expected to be sent to 11 states, including all of the states in the New England region.

  Nearly five million low-income households receive LIHEAP assis-tance each year. Congress approved $2.6 billion for LIHEAP this heating season and in January the federal government approved an additional $450 million in emergency funds.

  The Maine Economic Growth Council, in conjunction with the Maine Development Foundation, has issued its fourteenth annual report on Maine's economy. The report foc-uses on 24 indicators and measures how well Maine is doing in those areas over time. Red flags are given in areas that Maine has a low na-tional standing, while gold stars are awarded in the areas where Maine is exceeding.

  Four red flags were given in areas that were encompassed by the title "business climate." They included the areas of cost of health care, cost of energy, state and local tax burden and transportation infrastructure. An additional red flag was given to per capita personal income, by which measurement Maine has slipped from 35 th nationally to its present ranking of 39 th .

The report card did give four gold stars for land conservation, sustain-able forestlands, new business starts and health insurance coverage. The data showed that Maine had an estimated 1.5 million acres of public land and had 4,497 new business starts in 2006.

  Maine's gold star for health in-surance coverage has a mixed meaning.  Because of our high pov-erty rate, we have one quarter of our population or 260 thousand who qualify for free medical and dental insurance - MaineCare. This statis-tically raises the number of people who have health care coverage in Maine but is evidence of a much larger problem.

  Overall, 12 indicators remained unchanged from last year, eight got worse and four improved. Among those that slipped from last year's report were gross domestic product, the number of Mainers having to hold multiple jobs, the number of high speed internet subscribers and international exports.

  As always, I encourage you to send me your thoughts, ideas, questions and opinions.  You can contact me for more information on this or any other issue at 563-5427 or by e-mail at

Jon@JonMcKane.com

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