AUGUSTA, Maine — After the first six months of the budget year, state revenues edged back into the black, but state officials are cautious as they keep an eye on the increasing cost of energy. Revenues are $8.9 million over projections for this budget year.
“By and large we seem to be tracking the new and revised estimates,” Finance Commissioner Sawin Millett said. “We always carefully watch the price of home heating oil and gasoline and its impact on the sales tax if people find themselves with less disposable income.”
The sales tax is the second largest source of state revenues, with the state projecting it will bring in $962 million by the end of the budget year in June. But Millett notes so far it is barely over projections, just $763,398 or two-tenths of a percent above estimates.
“There is a modest amount of information that would suggest things are starting to turn a little bit,” he said.
Millett said he is reminded of the forecast a few years ago by University of Southern Maine economics professor Charles Colgan that the state’s economy would be “bouncing along the bottom for a few years” and said Colgan’s newest projection is sobering.
“He now is saying we could bounce along on the bottom for eight or nine years,” Millett said.
The individual income tax is also just making estimates and it is the largest source of state revenues, expected to bring in $1.4 billion this year. It is just $279,850 above projections year to date.
“It is the corporate income tax that continues to drive the positive balances as it has since last spring,” Millett said. “That’s even with the reprojection of revenues that was done at the end of November.”
The corporate income tax is $5.6 million above the recently increased estimates. That is 5.4 percent above projections.
“It certainly is good news but I don’t think it will make the job we have to do in this room any easier,” said Rep. Patrick Flood, R-Winthrop, co-chairman of the Legislature’s Appropriations Committee. “As we have seen earlier, revenues could take another dip and we will be back in the red next month.”
He said the committee will wait on next month’s revenue reforecast before finishing any budget bill that will then go before the panel. It is expected there will be a supplemental budget from Gov. Paul LePage in February to deal with budget matters not included in the Medicaid supplemental budget, which the Appropriations Committee is now reviewing, and the savings from the Budget Streamlining Task Force.
Rep. Peggy Rotundo, D-Lewiston, is the Democratic lead on the panel. She said she is still worried about the sales tax revenues that are only slightly over estimates.
“It’s clearly good news in that it is moving in the right direction,” she said. “What I keep looking at from month to month is the sales tax. Because I think that is a real measure of how Maine families are doing.”
Rotundo said it appears to her that Maine families are still struggling and the recession is still taking its toll on many. She said when sales tax revenues start to grow it will be a sign to her that the economy is on the mend.
“And certainly this can change and if we see oil prices spike it will have an impact on state revenues as it has in the past,” she said. “It is still a volatile time for revenues.”
Millett said while most revenue lines are slightly above or below projections, two areas are significantly below after six months. Money collected from fines and penalties owed the state is 7.6 percent below projections and taxes from cigarettes and tobacco are 2.6 percent below estimates.