AUGUSTA, Maine — When the books closed June 30 on the 2014 fiscal year, the state had more than $49 million in surplus.
A significant chunk of that extra cash came from individual and corporate income taxes bringing in $38.6 million more than expected in the recently concluded fiscal year. Another $9.8 million in surplus was created in state savings, when various agencies were able to spend less than expected.
More than $49 million sounds like a lot of money, but it represents only about 1.3 percent of the state’s budget, according to the most recent issue of “Fiscal News,” the monthly newsletter published by the state’s Office of Fiscal and Program Review.
The presence of surplus doesn’t mean lawmakers can spend that money wherever they like. Maine law sets rules on where unanticipated revenue at the end of a fiscal year must go. This year, $19 million went into a reserve account accessible to lawmakers for unexpected budget needs in the current fiscal year.
Meanwhile, $10.3 million was allocated to an employee retirement reserve, and another $8.5 million was allocated to the state’s rainy day fund, another emergency account where cash is stashed away for more dire emergencies, such as recession.
Another $3.5 million was funneled into the “Tax Relief for Maine Residents” fund, established by the Republican-controlled 125th Legislature as a means to put money away for an eventual, permanent reduction in the individual income tax.
While income tax from both individuals and businesses was more than expected in the recently concluded fiscal year, total tax revenue is still lower than pre-recession levels.
A study released by the Pew Charitable Trusts on Monday showed that for the first quarter of 2014, tax revenue in Maine was 4.5 percent lower than its pre-recession peak in the first quarter of 2007. In inflation-adjusted dollars, that’s a difference of about $20 million, according to Pew’s data.
The only New England state faring worse than Maine on the revenue front is New Hampshire, where total tax revenue is still 9.1 percent — or $59 million — below its 2007 peak.
Rhode Island has also still not fully recovered to pre-recession revenue levels, while revenues in Vermont, Massachusetts and Connecticut have all rebounded completely and even grown since the recession.
Follow Mario Moretto on Twitter at @riocarmine.