The state’s recovery from the economic recession and low energy prices that have put more spending money in Mainers’ pockets have led to one of the best state revenue forecasts in years.
The state’s Revenue Forecasting Committee develops a range of estimates related to the economy twice a year, but the most interesting and important one for state lawmakers is how much revenue will flow to state government. According to figures released Monday, revenues will be $45.5 million higher than budgeted for the current fiscal year, which ends on June 30, 2015. The committee also projects $67.5 million in higher-than-expected revenues for the 2016-17 biennium, which represents the two years that begin on July 1, 2015.
Those numbers mean that the state will bring in more money in the current fiscal year than is budgeted to be spent. A range of things could happen to that money. If state departments overspend their budgets, it could be used as backfill. Alternatively, it could flow into the state’s rainy day fund or transfer into the next fiscal year as surplus. Either way, it appears that the economic doldrums that have gripped Maine since late 2008 are fading.
The surplus in the next biennium gives lawmakers a bigger pool of revenue to draw from to either support state programs or enact tax cuts.
Gov. Paul LePage said in a written statement Monday that the improvement is partially attributable to tax cuts and other policy decisions that were enacted during his first term.
“Reducing the tax burden on Mainers was a good, meaningful policy decision in 2011 and the state is seeing an uptick in income tax revenue as a result,” said LePage. “Policies that reduce state spending, remove red tape and allow businesses to invest and create jobs are what we need to move Maine’s economy forward.”
Most of the increased revenue was due to jumps in income and corporate income tax collections.
Richard Rosen, LePage’s finance commissioner, said the positive news is due in part to conservative estimates by the Revenue Forecasting Committee in previous years. Many states have been hurt by lost revenues this year because they didn’t adequately account for the effects of federal-level tax increases implemented in January 2013 that were associated with the Affordable Care Act.
“While other states have been plagued by unexpected shortfalls, our reliable and conservative approach to revenue forecasting has helped ensure that the state is in a sound financial position,” said Rosen.
Michael Allen, associate commissioner for tax policy, said the end of the recession and lower energy prices have given Maine families more confidence headed into the holiday season, which bodes well for the state’s economy and by extension, revenues to fund state government.