AUGUSTA – After the first four months of the budget year, state revenues are $26 million below estimates. That leads to a growing concern revenues will have to be re-projected down next month making the budget shortfall all the more difficult to address.
“We have now seen some of the larger revenue lines below estimates for three months,” said Rep. Pat Flood, R-Winthrop, the co-chairman of the Legislature’s budget writing Appropriations Committee. “We have to be concerned that that is a trend.”
He said sales taxes were down in October and so far this budget year is below estimates by over $13 million. He said the sales tax has always been a reflection of how Mainers believe the economy is doing although he said auto sales continue to be up over a year ago.
“It’s really a mixed revenue report,” Flood said.
Finance Commissioner Sawin Millett agreed. He said after four months of the budget year, the sales tax is a concern of his as is the corporate income tax which was down $1.3 million in October and is nearly $14.5 million below estimates for the four month period.
“We may well see revenues re-projected by the revenue forecasting committee when they meet,” he said. “That will make it all the more difficult to put together a supplemental budget for the current 2013 budget year.”
Millett said the mixed report of the Consensus Economic Forecasting Commission will affect the revenue forecast. Jim Clair, chairman of the Commission said the panel adjusted their forecast to reflect the actual numbers this year and that nearly 7,000 new jobs had been added in the state from July of 2011 to July of 2012.
He said that results in a projection that the economy is growing slightly better in the current budget year than projected, but the panel does not see any major increase in growth over the next few years.
“We either kept our estimates as they were from last February or reduced them slightly,” Clair said. "We don’t see the economy really moving until after all of this uncertainty in Washington is resolved.”
The panel made the assumption that Congress will avoid the “fiscal cliff” by continuing at least some of the current tax rates and make “selective” cuts in federal spending. Clair said if that does not happen, it is likely the nation will go back into recession and Maine’s economy will suffer.
“We will be facing a very difficult situation if the Congress does not act,” said Rep. Peggy Rotundo, D-Lewiston, the lead democrat on the appropriations committee. “It will be difficult even if they do act because of the budget issues and now revenue issues we have in the state.”