Maine's revenue forecasting committee is making modest adjustments for the next few fiscal years, but it's also warning state lawmakers that President Donald Trump's erratic tariff scheme is injecting a high degree of risk in its projections.
The committee's projections are critical to how the legislature crafts the state's two-year budget.
The committee's revised report will be released Thursday and it's projecting moderate declines in sales tax and corporate income tax revenues.
But state economist Amanda Rector, who also chairs the forecasting committee, told legislative budget writers Tuesday that frequent changes in the president's rollout of import taxes — or tariffs — are making it difficult to predict long-term behavior by businesses and consumers.
"A lot of the forecasts that have been issued so far have seen relatively minor changes in part because the uncertainty is so high that it's hard to know what to do," she said.
Rector said the committee needs additional data to make more significant adjustments to the revenue forecast, but she noted that the recent volatility in the stock and bond markets are indicators of the uncertainty felt by businesses.
Other members of the forecasting committee compared the situation to the recession caused by the pandemic. Congress moved to blunt the impacts of that economic downturn by passing spending bills to help businesses and people who lost their jobs.
However, the Trump administration is currently pursuing an austere economic program alongside a tariff rollout that's ostensibly designed to reorder global trade. The latter has led major trading partners like Canada to retaliate and consider a wholesale rejiggering of their economic plans away from the U.S.
Canada is Maine's leading trade partner, but the president's tariffs and threats to annex the country has triggered a nationalist response that threatens the relationship. A top tourism official recently projected that tariff tensions would result in a 25% drop in Canadian tourism to the state.
