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Maine Ends Budget Year With $59 Million Surplus

AUGUSTA, Maine - The state of Maine has ended its fiscal year with a surplus of almost $60 million, which some suggest is a sign of a rebounding economy. State revenues were up almost 7 percent over a year ago. But that extra cash is already spoken for.

The budget year ended on June 30, and state Finance Commissioner Richard Rosen says when all is said and done the state had a revenue surplus of $30 million, along with unspent balances in various accounts that contributed to the overall surplus. "Even after taking into account the May re-forecast and the May adjustment, revenues came in strong for the year and they indicate an underlying strength," he says.

Rosen points out that revenue projections during the budget year tend to mask the fact that there has been a year-over-year increase in state revenues of nearly $216 million, or 6.9 percent.

Rosen is particularly pleased that revenues across a broad range of sources increased over the last year. Both the personal and corporate income taxes showed growth, as did the state sales tax, which has been pretty much flat since the recession. "We’re seeing taxable sales that have grown at 4.7 percent, which is clearly the strongest year we have seen in taxable sales growth since the recession."

Lewiston Democratic Rep. Peggy Rotundo, who co-chairs the Legislature's Appropriations Committee, says she hopes the apparent trend of increased sales tax revenues continues in the new budget year. "One of the areas that I have looked at over the years is sale tax, because I think that is an indication of how working families in Maine are doing and I am glad to see that is up."

Both Rotundo and Rosen were on Appropriations when the recession hit six years ago, and they saw state revenues fall so dramatically that they were adjusted down nearly monthly. Rotundo says she hopes the growth over the last year is an indication that Maine’s economy has finally started to see some real growth. "I hope we are on the road to a fuller recovery because things have been very difficult for many families in Maine since the recession started."

Rosen points out that in the budget that was passed over Gov. Paul LePage’s objections and vetoes, is a provision that Rosen considers very important: It eliminates the so-called "cascade" under which the surplus was spent on projects and programs that had been approved but not funded. "The year-end use of any year-end surplus is now really focused on the budget stabilization fund, so we will be able to report a balance now in the budget stabilization fund of $111 million."

That account is commonly called the "rainy day" fund by lawmakers because it is a hedge against future economic downturns. Rosen says that is important to the bond rating firms that urge states to set aside as much as 20 percent of their yearly revenues. Maine’s statutory goal is now 18 percent, which is a little less than $600 million.

The other major use of the surplus is to set aside funds to pay for lowering the state personal income tax rates in the future. The state started that practice last year and has set aside more than $9 million for that purpose.
 

Journalist Mal Leary spearheads Maine Public's news coverage of politics and government and is based at the State House.