July restaurant and lodging tax revenue in Maine rose sharply compared to June, but collections from auto and building supply sales and personal consumption all declined as federal stimulus benefits wound down and some sectors experienced inventory shortages.
The numbers reflect potentially short-lived gains in an uneven economy in which growth is expected to slow going into the fall. Employment data released Friday by the U.S. Bureau of Labor Statistics showed 661,000 jobs added to the U.S. economy in September and a lower unemployment rate at 7.9 percent, down from 8.4 percent the month before. But the numbers failed to enthuse economists, who told Yahoo Finance that recovery momentum was slowing as was the pace of hiring.
Initial unemployment claims in Maine nudged up last week. House Democrats on Thursday approved a $2.2 trillion coronavirus relief package, but they still have not struck a deal with the Trump administration to boost the economy.
Still, Maine restaurants and hotels got some good news for a change in July. Restaurants paid $253.6 million in taxes in July, up from $188.1 million in June but still 30 percent below the $361.5 million they paid in July 2019, according to new Maine Revenue Services data released this week. Hotels paid $146.5 million in tax revenues in July, more than double the $58.3 million in June, but far less than the $244.3 million in July 2019.
The increases in the taxes paid reflected higher business volume from both in-state and out-of-state tourists as economic restrictions lifted. Gov. Janet Mills allowed indoor dining in all but three counties on June 1 and added remaining counties on June 17. Lodging establishments were allowed to reopen to out-of-state visitors on June 26 with quarantine or testing requirements in place for most states.
It’s still not clear how hospitality businesses will fare as the prime tourist season ends and cold weather forces restaurants to move outdoor spaces back inside, said Adam Lee, board chairman of Lee Auto Malls, which run 19 car dealerships throughout the state, and a member of the governor’s economic recovery committee.
“I think what happens in the fall will be industry-specific,” he said.
Auto sales taxes declined from $601.4 million in June to $522 million in July, but they still were up from the $515.9 million last July. The building supply and personal consumption sectors also were down from June to July of this year. Lee blamed that on long-running pandemic supply shortages.
Cars were hard to get in June and July because vehicle manufacturers still were ramping up after pandemic restrictions halted production for a couple months, he said. Likewise, supplies for upgrading homes and some appliances were hard to get. But volumes are starting to rebound, he said.
“I think October auto sales will be fine if Congress can come out with a stimulus program in October,” he said. “I’m optimistic about October but I’m not very optimistic about November and December if Congress doesn’t come up with a stimulus plan.”