AUGUSTA, Maine — State revenues were above estimates for March by $26.2 million, bringing the year-to-date revenue surplus to $33 million.
“It sure is good news,” Finance Commissioner Ryan Low said Tuesday. “Both corporate and individual income taxes are continuing to come in above estimates.”
March was the first month of figures available since the state recalculated revenue projections on March 1.
Low said Tuesday that sales taxes were nearly on target, just $75,000 below projections. He said the sales tax is an area he watches closely because it tends to reflect disposable income. With energy prices edging up, he is concerned there may be a repeat of two years ago when oil prices spiked.
“Energy prices are always a big concern,” Low said, “We saw the impact that it had a couple of years ago and if those prices continue to creep up, it not only has an impact on state expenditures, it has an impact as people put more of their income toward purchasing fuel and oil and that type of thing. It has an impact on their spending.”
He said another spike in energy prices would have a broad impact on the state by affecting revenues and expenses. It also would affect the state economy as it tries to rebound from the recession.
“April always is a big month for us,” Low said. “It is a big month for income tax revenues, and we are closely watching that to see if we stay on projections.”
He said there is always the possibility of a “surprise” as has occurred in past years when taxpayers filed for larger-than-projected refunds in April. He said the year-to-date surplus should be enough to handle any dip in income, and he expects the state will end the budget year with a significant revenue surplus.
“It’s too early to guess what it would be,” he said.
Low said corporate income tax money has been above projections for months, which is a trend that continued in March. The final figures were $10.9 million above estimates. He said discussions with Maine Revenue Services have led him to believe the trend will continue at least through June, perhaps beyond.
“Corporations are profitable, even in this recession,” he said.
Rep. Emily Cain, D-Orono, the co-chairman of the Appropriations Committee, said after the last 18 months of roller coaster revenue reports and re-projections, having tax revenues performing better than projections is a relief.
“I am leaving my seat belt on for the rest of this roller coaster ride,” she said. “I am not sure we are off the roller coaster yet.”
Cain said she reads national news reports about how the economy is starting to rebound from the recession, but she does not think Maine has had the same success as other parts of the country.
“I share the concern about April revenues,” she said. “It is such an important month for revenues and we don’t know, for sure, what is going to happen.”
Sen. Richard Rosen, R-Bucksport, the GOP senator on the panel, said having revenues above projections is always better than having them in the red. He said while revenues are one indicator of the economy, he watches employment figures to see if the number of people working has increased.
“We still have fewer people working than when this recession started,” he said.
Rosen said it was just a year ago when forecasters completed a revenue projection during one month, only to find it did not hold up a few weeks later. Revenues continued to plummet, and the state had to use reserves to keep the budget in balance.
Low said he well remembers last year’s budget problems and hopes such issues are part of the past.
“I remind people that even with these reprojections, we are a billion dollars below the revenue we were getting before the recession, and we have not recovered the jobs we lost in this recession,” he said.
He said it will be a long road for the state to recover the jobs it has lost and the tax revenue from those jobs.