AUGUSTA, Maine — With three quarters of the budget year complete, revenues are $35 million over estimates and Finance Commissioner Sawin Millett says his pessimism is fast being replaced with optimism that the state will end the budget year with a revenue surplus.
“March was a good month, up $13.5 million over estimates,” said Millett. “It was driven by corporate taxes above estimates and sales taxes coming in above estimates.”
He said the revenue reports this month are confusing because the $13.7 million in revenue that was misplaced in a holding account in January is added into the figures for March. He said the $13.5 million figure is the revenues over estimate for March with the cash from January set aside.
“That is why you see the big increase in the year-to-date figure from February to March and the revenue surplus at $35 million,” he said. Millett said he is optimistic about revenues over the last three months of the budget year; after the January mistake, revenues were properly assigned by revenue category. He said there is now a clear pattern of increased sales, income and corporate income taxes that started last fall.
“I am more optimistic than I have been in the last two or three months,” he said. “Things are looking better. We are in pretty good shape at the three-quarters mark.”
But Millett declined to give an estimate on what the size of the revenue surplus might be, saying the Revenue Forecasting Committee meets April 30 and once they have done their work he will have a clearer picture of revenues through the end of the budget year.
“I am very concerned about April, an April surprise, and I think we always have to be concerned about that,” he said.
Millett said he has seen years where the filing deadline has yielded good news with unexpected revenues, and he has seen years when the tax filings have been substantially below estimates. This year the filing deadline is April 17.
“I am always nervous until the filings are in and we have analyzed them,” he said.
Members of the Legislature’s Appropriations Committee share his concern. Sen. Richard Rosen, R-Bucksport, is the co-chairman of the panel and like Millett has seen both good and bad “surprises” in April.
“April is always a critically important revenue month,” he said. “We know from history that it is difficult sometimes to predict and we have seen surprises in April, both positive and negative.”
Rosen said he is pleased to see that revenues appear to be on the rebound and that it is likely the state will end the year with a surplus.
“I am looking forward to what the Revenue Forecasting Committee does later this month,” he said. “We are going to be back in working on a 2013 Medicaid budget in May and it would be good if they had a better revenue forecast for us.”
Rosen said the panel is waiting for new usage projections from the Department of Health and Human Services to work on the Medicaid budget. He said the more than 24,000 Mainers that were inaccurately listed as eligible for the program because of a computer error skewed projections and the committee needs the accurate data. The program currently is projected to have an $85 million shortfall in 2013.
“We do have our work cut out for us,” said Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the committee. She said the slow but constant increase in sales tax revenues is most encouraging to her.
“I have been watching the sales tax in particular because I think that is a good indication of how working families in Maine are doing,” she said.
Sales taxes are $11 million above estimates after the first nine months of the budget year. The detailed categories show solid growth over a year ago, with building supplies up 20 percent and autos and transportation up nearly 16 percent. Consumer sales, which Rotundo believes are a good measure of consumer confidence, are up 11 percent over a year ago.