AUGUSTA — State sales, individual income and corporate income taxes failed to meet projections in August, with overall state revenues $19 million below estimates. That puts state revenues after two months of the budget year in the red by $4.8 million.

“The overriding concern really deals with the sales tax,” Finance Commissioner Sawin Millett said. “We started off this year, last spring, with strong growth that seems to have tapered off, and now we are looking at sales taxes not meeting estimates.”

If the sales tax continues to be below projections, it will pose a significant budget issue in the next session.

“You have to worry as long as that $4-a-gallon gas price stays, people are going to start making decisions on what they can spend,” Millett said. He said some folks are already filling their oil tanks for the winter heating season and paying close to $4 a gallon for heating oil.

“The revenue forecasting committee may well have to re-project revenues when they meet in November,” he said.

The sales tax was below estimates in July by a couple of million dollars, but that grew to $6.7 million after the first two months of the budget year. Sales taxes paid to the state in August reflect collections merchants made in July.

State Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the Appropriations Committee, said the sales tax is a good measure of how the average Mainer is doing. If they are optimistic, they spend more on goods and services, but if they are worried they tend to save any extra money they have for future expenses.

“We were hoping that July was a blip,” Rotundo said, “with this second month coming in below, there has to be a concern here that there may be a trend.”

The individual income tax was down $10.7 million, but that was expected because of a timing issue with individual income tax receipts above estimates by $11.4 million in July. Except for the timing issue, individual income taxes were close to estimates in August.

The failure of the major tax lines to meet estimates was offset somewhat by smaller revenue sources. For example, the tax on cigarettes was above estimates by $2 million.


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