AUGUSTA, Maine — With another day of income yet to be counted, state officials say that August state tax revenues will be above estimates, wiping out the $1.2 million shortfall in July.
“We won’t know what we have done for the month until it actually closes,” said Finance Commissioner Ellen Schneiter. “But it appears we are going to come in above estimates instead of below this month. How much, we will have to wait and see for sure.”
Mike Allen, the research director at Maine Revenue Services, said that sales taxes are “a little above” estimates in August and that income tax withholding could be above estimates by as much as $10 million, but he was uncertain as to why personal income tax revenues are above estimates.
“Can’t really explain it,” he said. But, he said, it would not be correct to interpret the additional income tax revenue as an indication of any “turnaround” in the economy.
“There is no indication of any big change in the economy,” Allen said.
Schneiter said that in July the state was six-tenths of a percent below revenue estimates and that she does not expect August will be more than “a few percentage points” above estimates. She said many of the smaller revenue lines appear to be very close to estimates, even though some are above and some below projections.
“Our estimates really appear to be close to target,” Schneiter said. She said that while she is confident the state will move into the black when August revenues are completed, she has seen enough last minute “surprises,” both good and bad, to provide a guess as to what the final numbers will be.
Rep. Emily Cain, D-Orono, the Appropriations Committee co-chair, said that while it is good news to see that August revenues are in the black, she is still concerned that the economy is continuing to “bounce along on the bottom” and agrees that the good news on the income tax could be wiped out in the months ahead.
“Well, it seems like we are now in a pattern of inconsistent revenues,” she said, “that’s why we are watching it carefully.”
Cain said there are no clear indications that the economy is growing again, which would result in increased state revenues. For example, she pointed to the corporate income tax that was significantly above estimates for months, but which fell slightly below estimates in July. She said a single large, corporate taxpayer could affect estimates, depending on when the payment is received by the state.
“Hopefully, we have a better picture after we have September revenues, so we have the revenues for the first quarter of the budget year,” she said. “Maybe we will have a pattern by then.”
Sen. Richard Rosen, R-Bucksport, is the GOP senator on the Committee and said the August revenues are a continuation of the “up and down” nature of revenues as Mainers continue to suffer from the recession.
“If you look at the big picture, overall revenue items are roughly coming in about as projected,” he said. “It is very tough to read too much into one month or two months of figures.”
But, Rosen said, it is important to review carefully the various state revenue lines every month and see whether there are trends, good or bad. For example, he said the sales tax now has been slightly above projections for several months and that may be a good sign.
There also is concern among members of the Appropriations Committee that some of the basic numbers used to project revenues may not be as accurate as they should be. Rep. Sawin Millett, R-Waterford, said he is troubled by the revisions in the national number of employed Americans. The system that creates that estimate is also used to develop state employment numbers.
“Based on what I have read in the papers, I have to wonder if we have a high level of confidence in the accuracy of numbers that we have been getting for the last few months,” he said. “Or are there some ominous indications here?”
Millett asked that the mid-September meeting of the panel include a discussion of how the employment estimates are made and whether they are accurately reflecting jobs in Maine.