Recession taking bite out of tax collections
3/21/09 | 9 comments

Recession taking bite out of tax collections


Effects of recession seen worsening in Maine
By The Associated Press

AUGUSTA, Maine — Lower than projected February tax collections show the negative effects of economic recession in Maine are accelerating, the state’s top tax agency analyst said Friday.

The revenue slowdown, while still relatively modest, is expected to get worse and complicate state officials’ efforts to enact a two-year budget and keep it in balance, said Michael Allen, the director of econometric research at Maine Revenue Services.

“It’s about what we expected and should expect” over the coming months, Allen told legislative budget writers.

Allen said there were significant declines in taxable sales and individual income tax withholding, which analysts regard as key indicators of current economic activity.

In a written report this week, Gov. John Baldacci’s budget chief, Ryan Low, said February revenue collections fell $20.5 million short of projections.

A special budget forecasting committee already had lowered state revenue expectations for the year, and pessimism over the state’s financial prospects is growing now that collections are falling short of those lowered estimates.

“It seems we shouldn’t be surprised by anything that happens these days,” Allen said.

Members of the Legislature’s Appropriations Committee are working through Baldacci’s proposed $6.1 billion budget for the coming two-year cycle. Looming over those talks is the prospect of another reduction in revenue estimates that would spawn a new money gap. A new set of formal revenue projections is expected by May 1.

The timeline is uncertain, but it is possible lawmakers will approve a two-year budget package before May, working with revenue estimates already in place. If that happens, Baldacci and the Legislature would have to find a way to close any future deficit.

A monthly revenue report the Baldacci administration released this week shows year-to-date sales tax collections are about $26 million below what budget makers had expected.

“Rising unemployment is taking its toll on state revenues, particularly sales and withholding taxes,” the report said.

The report also says consumer spending on taxable goods and services is falling at a rate not seen since the 1990s and likely will continue until the labor market stabilizes.

Committee members, already familiar with signs of an economic downturn in the state, stopped short of expressing alarm Friday.

“It’s not good, but it’s not surprising, necessarily, either,” said the House chairwoman of the committee, Democratic Rep. Emily Cain of Orono.

Looking toward the future being suggested by Allen’s remarks, Republican Sen. Richard Rosen of Bucksport added, “the slope still looks pretty steep.”

Not registered? Click here
E-mail this
Print this
Guidelines for posting on bangordailynews.com

Bangordailynews.com is pleased to offer a forum for readers to react to our stories, discuss them and provide additional information. We are reluctant to delete comments, but do reserve that right for those who abuse our forum. For more on using this site, please see our terms of service.

The primary rule here is pretty simple: Treat others with the same respect you'd want for yourself. What does that mean specifically? Here are some guidelines (see more):

Comments
9 comments on this item
On 3/20/09 at 9:26 PM, outlaw wrote: Click here to view hidden comment         Repeated separate thumbs down will cause comment to be hidden
On 3/21/09 at 4:06 AM, olmainer wrote:         Repeated separate thumbs down will cause comment to be hidden

well looks like the smokers or mostly ex smokers now are putting a hurtin on the govs wallet ,how much has the state saved in all the rhedoric they ranted about to get these laws

keep up the nice work lol

Report abuse
On 3/21/09 at 9:10 AM, superchip06 wrote:         Repeated separate thumbs down will cause comment to be hidden

Just maybe the crookes in Augusta could figure out a way to tax all of us everytime we hit a pothole in the road this could certanly help fix the tax problem !

Report abuse
On 3/21/09 at 11:32 AM, classiccarnut wrote:         Repeated separate thumbs down will cause comment to be hidden

I heard on the news the other day that they just approved a very expensive public land purchase,at least one from from Roxanne Quimby, (she not lacking for money) if they saw this shortfall is it really a priority to buy more land now?

Report abuse
On 3/21/09 at 11:53 AM, Beelzebubba wrote:         Repeated separate thumbs down will cause comment to be hidden

You dolts in Bangor must be sooooooo proud of your native son.

Report abuse
On 3/21/09 at 3:14 PM, BobByn wrote:         Repeated separate thumbs down will cause comment to be hidden

No surprise here. No one's buying big ticket items in this recession(depression?), especially not to turn around and pay any state sales tax if you can help it. Walmart is the ONLY winner now, with people stocking up on meds, canned and dry foods, water and basic necessities. Cash will be king very shortly.

Report abuse
On 3/21/09 at 10:03 PM, bud55bud wrote:         Repeated separate thumbs down will cause comment to be hidden

ITS TIME FOR THE STATE TO CUT BACK. A COUPLE OF DAYS AGO I OBSERVED 7 DOT WORKERS FILLING POT HOLES ON A BACK ROAD IN LEVANT FROM THE BACK OF A TRUCK WIITH ONE DRIVER. A COUPLE OF OTHER STATE DOT PICKUPS WERE PARKED BY THE SIGHT. THIS IS A JOB THAT SHOULD BE DONE BY ONE MAN AND DRIVER. EVERY WHERE YOU LOOK IT IS AN OVERSPEND AND WE PICK UP THE BILL.

Report abuse
On 3/22/09 at 9:47 AM, Lizabeth wrote:         Repeated separate thumbs down will cause comment to be hidden

Our Congress people are more to blame than AIG. They should have set the rules before they gave the money and they all knew well in advance about the bonuses but did nothing until there was a flap. It is ridiculous that they can pass a law to tax them at 90%. A contract is a contract. Just think what they are doing and what they can do in the future to us. It is scary.

Report abuse
On 5/16/09 at 4:30 AM, AliyaG wrote:         Repeated separate thumbs down will cause comment to be hidden

Living in times of recession is not that easy. Since recession has hit our country lots of us have become jobless and struggling hard just to meet our ends. Right now, The Story of Stuff is starting to make the rounds on the internet. The Story of Stuff is a documentary short by Annie Leonard, an international trade critic and environmental causes advocate. The video is short – 20 minutes – and it explains the cycle of goods and services, and the staggering amount of waste that's produced in our quest to have stuff. She also points out that our consumer model of society has created many of the problems we face, and some people would give a cash advance to make the film go away. Still, The Story of Stuff could mean a need for credit repair on the guiding philosophy of life these days.

Report abuse
You must be logged in to post a comment. click here to log in.

Powered by: Creative Circle Advertising Solutions, Inc.