AUGUSTA, Maine — State revenues in May were $15 million over estimates and Finance Commissioner Ryan Low said the state will end the budget year this month with a surplus in excess of $50 million.
“It’s good to see revenues coming in higher,” he said. “We went through a long period there when it was all bad news.”
Low is particularly pleased that sales tax revenue in May was again above estimates. The state took in $5.5 million more than expected, bringing the sales tax to $11.8 million above projections for the year. Until April, the sales tax had not met projections for 18 months.
“To see back-to-back months above projections is certainly a good thing and shows there is some consumer confidence out there,” he said. “But you have to look at this in context of how far down we still are from the past.”
The detailed sales tax revenues reported in May reflect April sales. The key areas of consumer sales and general merchandise are still bringing in fewer dollars than they did a year ago. For example, food store sales brought in $105,152 this April and brought in $110,006 in April 2009.
The two largest sources of state revenues are income and sales taxes. With one month to go in the budget year, the sales tax has brought in $735.4 million and the personal income tax has brought in $1.1 billion and is ahead of estimates overall by $11.8 million.
“Some of these large corporations are really doing well,” Low said. “The corporate income tax continues to come in way better than we projected.”
In May the corporate income tax was projected to bring in just under $2 million, but actually brought in $5.4 million. So far this budget year the corporate tax is above estimates by nearly $20 million. Low said it is an area in which Maine Revenue Services is trying to improve its revenue projection capability.
Low said that based on revenues collected to date, the state will end the budget year this month with a surplus of at least $50 million. He said so far, June revenues are just about on target and when finally tallied could be a little above, or a little below estimates. He said appropriated but unspent funds always boost the surplus.
While Low said the revenue picture seems to be improving, he is cautious about the future. He said Maine’s economy is significantly affected by the national economy and there continue to be mixed signals at the national level.
“Unemployment continues to be higher than what is expected in a recovering economy,” he said. “That has to be a worry.”
The national unemployment rate in May was 9.7 percent and Maine’s was 8 percent. That translates to 54,900 Mainers out of work and looking for work.
Sen. Richard Rosen, R-Bucksport, the GOP senator on the Appropriations Committee, said he long has worried about employment numbers. He said both at the national level and in Maine, not enough people are working.
“My greatest concern is that we have not started to see the growth in private sector jobs we need to get the economy going again,” he said.
Rosen said while the surplus projection is good news, he said it will be far short of what is needed by the next Legislature with sluggish economic growth and the loss of the recovery act funding. He said the focus of lawmakers, and the new governor, must be the economy and continued restructuring of government to reduce its cost.
Rep. Emily Cain, D-Orono, the committee co-chair said the fact that revenues are meeting the new projections is good news after the “roller-coaster” of revenues over the last two years. She said that does not deter from the budget problems the state will face next year.
“I am not pretending that I think the next fiscal year is going to be particularly easy,” she said. “But ending this fiscal year in a positive position puts us in a stronger position to meet those challenges head on.”