AUGUSTA, Maine — State revenue collections fell $5.2 million short of projections in December as the holiday shopping season got off to a slow start amid anxiety over the resolution of the nation’s fiscal cliff in Washington, D.C., Maine’s top tax official said Thursday.
Sales figures in nearly every business sector were either flat or below their previous year’s performance in December, Mike Allen, Maine’s associate commissioner for tax policy, told members of the Legislature’s Appropriations Committee. The exceptions, he said, were restaurants, lodging and auto sales, which grew about 5 percent over December 2011 figures.
While revenues were off $5.2 million in December, revenues for the fiscal year that started July 1, 2012, are generally keeping pace with projections, Allen said. The state is running about $600,000 ahead of projections, according to the state’s December revenue report.
Those projections were revised downward in November in response to a sluggish economic activity and uncertainty over the resolution of the fiscal cliff in Congress. Those downward projections were the basis for Gov. Paul LePage’s curtailment in late December that ordered state agencies to make $35.5 million in immediate spending cuts.
One revenue category that saw some growth in December was the individual income tax category, which came in $6.7 million over projections. Much of that increase was a result of higher-income residents shifting their income from 2013 to 2012 as they prepared for Bush-era tax cuts to end for people making more than $250,000 and for tax hikes to take effect in 2013 under the Affordable Care Act, the Obama administration’s health care reform law.
The ultimate fiscal cliff resolution package put an end to Bush-era tax cuts for people making more than $400,000.
“There was every incentive for those high-income households to shift as much income as possible from 2013 and future years into 2012 to try to avoid what were certain tax increases through the Affordable Care Act and fairly high probability of higher income taxes through the negotiations of the fiscal cliff,” Allen told Appropriations Committee members.