AUGUSTA, Maine — After months of disappointing numbers, state revenues were above estimates in December by $30.8 million, sparking a glimmer of hope among lawmakers that state revenues have finally stabilized in this recession.
“We are not ready to celebrate,” Finance Commissioner Ryan Low said Tuesday. “But it is a lot better to be sitting here talking about numbers that are up instead of numbers that are down.”
The December revenues are the first to reflect the new, downward projections made in November. Low said some of the numbers are the result of timing issues related to when people pay their taxes and are not an indication that forecasters overreacted in the new downward projections of revenue.
“We have been looking at the numbers so far this month, and they are tracking closer to the November estimates,” he said. “So that is an indication some of this is timing.”
Low said many taxpayers pay their final estimated income tax payments in December, and it appears more than usual did in December. He said there are other indications that other types of revenue also had some timing issues so that some revenue expected in January actually came in during December.
“From looking at what we have seen so far this month, I would say about half of that $30 million is the result of timing issues,” Low said.
For the third month in a row, corporate income taxes were above estimates. Forecasters had adjusted upward their projections for the corporate income tax, but it was $12.6 million above those projections. The individual income tax was above estimates by $5.4 million. Sales taxes were slightly below the new estimates, missing projections by $765,000.
“We are not ready to celebrate yet, “Low said.
Lawmakers on the Legislature’s budget writing Appropriations Committee are holding public hearings this week on cuts totaling $438 million. They say they are pleased to see the positive numbers after months of red ink, but agree a celebration would be premature.
“I think that any sentence that starts with ‘revenues were up’ is a good one for me this time of year,” said Rep. Emily Cain, D-Orono, co-chair of the committee. “I am certainly not looking at this as some great sign that things are turning around.”
She agreed with Low that some of the additional revenue in December is the result of timing, and she wants to see several months of positive revenues before she can be confident revenues are on an upward trend.
“I am glad that December not only met but exceeded the estimates of the revenue forecasting committee, and I hope that is a sign that will continue,” Cain said. “I am hoping this marks the beginning of a turnaround.”
Sen. Richard Rosen, R-Bucksport, the GOP senator on the committee, said he would like to hope revenues have bottomed and now will be on the rebound. He also said it is far too soon to say that has happened.
“One month does not a trend make,” he said. “We have been on a real roller coaster as far as revenues are concerned for 18 months, and this may be a blip, not the trend we all are looking for.”
Rosen said he wants to see improvement in the unemployment numbers and some job growth before he is ready to say the recession has started to recede. So far in this recession, Maine has lost 33,000 jobs.
“I am going to have to see evidence in the economy, primarily related to employment and wages earned before we can assume that we are going to see a major reversal in the forecast we are working with,” he said.
Rosen said the committee needs to continue its work based on the current revenue forecast and not assume it will have any more revenue. Low said the revenue forecasting committee is scheduled to meet again in February.