AUGUSTA — An accounting error at Maine Revenue Services that led the state to underestimate revenues by $14 million will force another delay in state budget negotiations.

While lawmakers felt heartened that holiday sales were better than previously thought, they asked revenue services officials Tuesday how — and why — the mistake happened.

“We all owe taxpayers an explanation,” said Rep. Peggy Rotundo, D-Lewiston.

Department of Administrative and Financial Services Commissioner Sawin Millett said a longtime employee died last fall, and her supervisor took over the work of reconciling deposits. One of the deposits made in January — which reflects December revenues — wasn’t credited to the proper accounts.

The mistake wasn’t discovered until the end of March, he said.

“This is not a systems issue, but human oversight,” he said. “The individual was probably overwhelmed by volume, it slipped, and didn’t get reconciled.”

The additional revenue is $6.6 million in sales tax, $5.2 million in corporate income tax, $1.9 million in income tax withholding and an additional $600,000 in other tax revenue.

Sen. Roger Katz, R-Augusta, asked whether there are proper checks in place to ensure against theft.

“Fortunately it was not dishonesty on anyone’s part, it was human error,” he said. “Let’s say somebody had stolen $14 million. Could that have happened under this scenario?”

Maine Revenue Services Director Jerome Gerard said it’s unlikely because the money is electronically transferred from the taxpayer’s bank account to the state’s bank account.

“The information that didn’t get recorded was where the money was to be credited to,” he said.

With revised figures that show stronger holiday sales, Maine Revenue Services economist Michael Allen said he feels better about the outlook for the state’s economy.

“We thought Maine consumers were feeling mighty low,” he said. “We would have had a much different view of how Maine consumers were behaving (if they had accurate numbers).”

The news came late Tuesday as lawmakers were continuing negotiations on a $38 million supplemental budget. While some work will continue on non-controversial items, the committee will now need to wait until May to get firm revenue numbers.

The accounting error also casts doubt on revenue projections moving forward, said Rep. David Webster, D-Freeport. Revenue forecasters who based their three year projections on January numbers that have now been found to be faulty, will meet again to revise their numbers.

“It forces us to stop to make certain we have good, accurate numbers so we can make good clear decisions,” he said.

Lawmakers are also waiting on figures from the Department of Health and Human Services with regard to an estimated $100 million shortfall in the 2013 fiscal year. Those numbers have been delayed because the department recently disclosed that it was continuing to provide Medicaid health insurance to 19,000 people even after they were no longer eligible.

Appropriations Committee House Chairman Patrick Flood, R-Winthrop, said the committee has made some progress on the $38 million supplemental budget, but has not voted on controversial items such as cuts to General Assistance for cities and towns and the elimination of state funding for the Maine Public Broadcasting Network.

“Once we get over our need to recalculate, (the additional money) will make our work a little easier,” he said.

Susan Cover — 620-7015

scover@mainetoday.com

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