AUGUSTA – According to state reports that track revenue to Maine state government from month-to-month, Maine’s revenue from major tax categories has been falling behind projections since the November election.
It could be the timing of tax payments and refunds, or it could be something else.
Either way, the reports show the fragility of the plan put forward by Governor Janet Mills to increase the state budget by 11% and spend all but a few hundred thousand dollars out of nearly $8 billion that the state believes it will collect over the next biennium.
produced by the Maine Department of Administrative and Financial Affairs and the
State Controller, are the official source of information regarding the state’s monthly
revenue collection for the General Fund, which is used to pay for virtually all
government spending except transportation and federally funded programs.
the reports, at the end of the month of October, 2018, Maine’s revenues for the
fiscal year were exceeding projections by about $74.2 million. In that report, the
sales, individual and corporate income tax were all well ahead of projections.
Since then, reports have shown a decline in revenues against state projections, which are used to keep the state budget in balance.
In November, individual and corporate income tax both dipped below projections, coming in about $2 million under what was projected. Overall, November revenues were below projections, which reduced the fiscal year projections to $48.2 million above budget, a drop of about $26 million.
Fast forward to the most recent report, which updates the numbers through the month of February 2019, and state revenues overall are about $20.3 million below projections, meaning that since the end of October, Maine has seen a swing of about $94.5 million in actual revenue versus projected revenue.
The culprits of the recent decline appear to mostly be in the income tax categories, with the individual income tax now $44 million below projections for the fiscal year, and the corporate income tax, which was $18 million ahead of projections at the end of October now just $11.5 million ahead.
Maine’s sales and use tax was about $17 million ahead of projections at the end of October 2018 but now stands at only about $347k ahead of projections.
If the trend holds, it could spell trouble for Governor Janet Mills, who has proposed spending all but about $400,000 of Maine’s projected revenue in her upcoming two-year budget proposal.
Budget experts have warned that Mills’ budget proposal could lead to serious budget shortfalls if Maine’s economy faces even a minor economic downturn.
accompanying the February revenue report says a large part of the income tax
shortfall is due to income tax refunds, but urges state revenue forecasters to
maintain a cautious outlook for state fiscal years 2019 and 2020.
On a brighter note, the memo says the tight labor market is resulting in solid wage growth, which boosts consumer spending.
Overall, Maine’s individual income tax revenue has been below projections every month since October of 2018. The corporate income tax has been below projections two of the four months, and sales tax revenue fell below projections in January, then turned around to edge up to two-tenths of one percent over projections in February.
Contrasting with this years revenue reports, in the previous fiscal year over the same time period, actual state revenue grew against state projections from $32.7 million to $79.2 million above what was projected.
According to the February sales report that accompanies the state revenue report, consumer spending remained strong in most categories, especially in lodging (+21.5%) and building supplies (+9.3%) but two categories saw declines, general merchandise (-1.4%) and utilities (-0.9%).