State revenues were $35 million above projections in August, fueled by higher-than-expected personal income tax withholdings. But state officials are worried the good news may be fleeting.
Mike Allen oversees state tax policy at Maine Revenue Services. He says the revenue increase was fueled by $600 bonuses in unemployment payments due to the pandemic, but those ran out at the end of July. The state's revenue projections are based on Congress providing additional stimulus funding, but that has yet to happen.
“The economic forecast assumed there would be another stimulus package,” Allen says. “I think it was around a trillion dollars that they were expecting.”
Allen says the current revenue surplus could disappear without another significant federal package, including more funding for enhanced unemployment benefits. And he says the Revenue Forecast Commission would likely have to further lower its projections of state revenues, adding to the state’s fiscal woes.