For Immediate Release: Thursday, October 25, 2018
Contact: Ian Swanberg, Associate Commissioner
Department of Administrative and Financial Services, (207) 624-7800
September Tax Revenues Exceed Forecast by $19.3 Million
Through the first quarter of the fiscal year, General Fund revenues are ahead of projections by $47.5 million.
Read More: Office of the State Controller Revenue Reports
AUGUSTA – Finance Commissioner Alec Porteous announced today that the State of Maine continued its trend of strong revenue growth in September, collecting tax revenues that were $19.3 million over official estimates. Strong performance in individual income tax, corporate income tax and sales and use tax were the primary drivers of the monthly surplus, which was 5.1 percent greater than forecasted projections. Revenues through the first quarter of fiscal year 2019 (July through September) were $76.2 million, or 8.2 percent, greater than first quarter revenues from the prior fiscal year.
August taxable sales—tax revenue realized in September—increased 7.9 percent over the previous August. Auto sales (+11.0 percent), building supply sales (+7.8 percent) and other retail sales (+13.1 percent) led continued growth in the sales tax revenue line, which accounts for nearly 40 percent of General Fund revenue. In addition, tourism-related sales were strong, with those tied to restaurants and lodging increasing year-over-year by 6.1 percent and 4.6 percent, respectively; and business operating sales grew by 11.7 percent—likely resulting from increased business investment in response to the federal Tax Cuts and Jobs Act (TCJA).
In keeping with sales tax revenue growth, individual income tax revenues exceeded projections by $4.5 million, or 2.7 percent, for the month and were 5.6 percent greater than September 2017 revenues. When compared to the same three month period last year, individual income tax collections increased by $32.1 million, or 8.4 percent, with paycheck withholdings up 8.0 percent for the first quarter and 6.0 percent for the calendar year to date.
“Maine’s expanding economy continues to drive revenue growth,” said Commissioner Porteous. “Continued strength in the automobile, building supply and other retail sales lines reflects an increased level of disposable income among Mainers and a high degree of consumer confidence. Renewed growth in sales tax receipts from restaurants and lodging offers evidence that Maine is enjoying another strong tourism season; and growing revenue from business operations sales is a sign of increasing business investment.”
Corporate income tax revenues were $7.3 million, or 19 percent, ahead of forecasted levels for the month. For the first quarter of the fiscal year, total corporate revenues were $14 million, or 27.4 percent, greater than collections over the same period during the prior year.
“The strength of both individual and corporate income tax receipts continues to be welcome news,” added Commissioner Porteous. “Individual income tax withholding receipts for the calendar year to date are 6 percent greater than the prior year, which aligns with strong wage growth in Maine. With the Federal Reserve Board recently increasing its real gross domestic product forecast for 2018, and net earnings growing at more than 5 percent in our state, Continued growth in consumer and business spending appears highly likely through the end of the calendar year.”
The Department of Administrative and Financial Services provides Governor LePage and Members of the Legislative Council, Joint Standing Committee on Appropriations and Financial Affairs and Joint Standing Committee on Taxation with a memorandum detailing the State of Maine’s revenue collections each month. The report provides key policymakers with a transparent overview of the State’s tax collections and ongoing economic outlook. It reports revenue growth in two measures: year-over-year growth and growth compared to the State of Maine’s most recent revenue forecast.
Read More: Office of the State Controller Revenue Reports
About the Revenue Forecast
The State of Maine has a two pronged approach to revenue forecasting that occurs through our independent Consensus Economic Forecasting Commission (CEFC) and the Revenue Forecasting Committee (RFC). The RFC typically meets twice a year and issues a revenue forecast that incorporates the recommendations from the CEFC. The forecast provides state government with an estimate of the tax revenues expected to be available for appropriation.
Membership of the RFC consists of the Associate Commissioner for Tax Policy, the State Budget Officer, the State Economist, an economist on the faculty of the University of Maine System selected by the chancellor, the Director of the Office of Fiscal and Program Review and another member of the Legislature's nonpartisan staff familiar with revenue estimating issues appointed by the Legislative Council.
###