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AUGUSTA, Maine — As cases of the new coronavirus increase throughout Maine, state officials are issuing dire warnings but few specifics so far about the financial and budget implications of the virus that are expected to be seen later this spring.
A Friday memo from Kirsten Figueroa, the budget commissioner for Gov. Janet Mills, said the world “most likely” entered a deep recession at the beginning of the month that would have repercussions in Maine, but revenue impacts of the virus will not begin to show in Maine later in the spring when March sales tax revenue is reported. The full effect of the virus on the state budget will not be clear until the end of the fiscal year on June 30.
January revenue was under budget by 4 percent, according to Figueroa’s memo, including $9 million less in individual income tax revenue than projected with $5.9 million less in corporate income tax revenues. Sales and use taxes were $8.1 million over budget for the month and total taxable sales — like building supplies, merchandise and other retail goods — were 12.5 percent higher than last year.
But those figures represent a completely different landscape in Maine, which saw its first confirmed case of the coronavirus less than two weeks ago. The total number of cases in the state stood at 118 on Tuesday, with more than half of cases concentrated in Cumberland County, according to the Maine Center for Disease Control and Prevention.
“There’s no question that policymakers should brace for a revenue and economic impact due to the virus,” State Treasurer Henry Beck said Monday, referring not just to the Legislature but municipal and county officials too. “That’s clear.”
Mills has declared a state of emergency and closed bars and restaurants to dine-in service and banned gatherings of more than 10 people. Unemployment claims have spiked and withholding revenues from lost paychecks are likely to be realized at the end of the month, Figueroa notes.
Figueroa said the “breadth and depth” of the virus’ effect on the economy is changing rapidly, making projections difficult, saying it’s “impossible to project the full magnitude of the economic contraction and its length.” Beck said he expects the state will not have trouble meeting cash obligations for the rest of the fiscal year.
State finance officials have been wary of making predictions, but have cautioned that key revenues, like sales and use taxes and income tax will take hits as the virus continues to spread. Those two revenue streams make up 85 percent of the budgeted undedicated revenues, according to state finance reports.
The federal government extended the filing date for income taxes from April 15 to July 15 in a move Mills said on Tuesday she and other governors are “not happy” about. She said she is exploring how to accommodate the new deadline “without sacrificing state finances.”
The Legislature passed a $73 million supplemental budget last week before adjourning, a package that was pared-back and heavily focused on health care and coronavirus-related items. It included $1 million dedicated specifically to fighting the coronavirus, and an omnibus bill giving Mills additional authority during the state of emergency and allowing the state to transfer up to $11 million into a reserve fund should more resources be needed.
It added $17.4 million to the state’s rainy day fund, which will stand at $257 million when the transfer is made. The legislative packages included none of the additional $40 million revenues for this year projected just a month ago by state revenue forecasters that is now more uncertain.
The effects on some streams of revenue are already apparent. Both casinos in Oxford and Bangor closed on March 16, drying up revenues, according to state figures. Oxford Casino pulled in almost $974,000 this month and Hollywood Casino has pulled in $400,000 in the same time period. Both pulled in a collective $4.5 million in March of last year.
Michael Allen, who chairs the forecasting committee and is the state’s associate commissioner for tax policy, said it’s unlikely the forecast his committee made a month ago will bear out. It cautioned then that the coronavirus may cause issues, noting the effects on the stock market and other aspects of the international economy “have emerged and intensified.”
But Allen said on Monday it was difficult then to foresee how bad things would get, saying “I just don’t think anybody understood what serious meant.”
“The speed and depth of the economic decline around the world is unprecedented,” Allen said.