AUGUSTA — State officials remain concerned about the state’s economic future despite ending the fiscal year with a nearly $50 million revenue surplus. They said high fuel prices and the unresolved federal debt-ceiling standoff are to blame for the uncertainty.
Lawmakers on the Appropriations Committee who were briefed Wednesday on the most recent monthly revenues as well as the June 30 year-end totals were told that despite the surplus, state revenue growth continues to be sluggish.
“(It) is certainly much slower than is being seen around the country,” said Mike Allen, research director at Maine Revenue Services. In Maine, sales- and use-tax revenues increased about 2 percent over the previous year, while growth nationally has been 4 to 5 percent, he said.
Increases in corporate and individual income tax revenues helped grow overall revenues 6.9 percent this year over fiscal year 2010, Allen said, but the state remains “well below” the $3 billion peak seen in fiscal year 2008.
Allen said high energy costs have been a drag on Maine’s economy. Gas prices are about a dollar per gallon higher now than a year ago, he said.
“If prices remain elevated, heading into late fall and early winter it’s going to put an even bigger stress on Maine households and certainly affect our sales and use tax line,” he said.
Clouding the economy in the short term is the federal debt ceiling.
“Nobody knows how the federal government is going to react or when it’s going to react,” Allen said.
“It depends on which payments the federal government is not going to make should that be an issue — is it that they don’t pay federal employees? Do Social Security payments go out or not?” he said. “If those don’t go out or are cut back significantly, that could have a big impact on the state of Maine. We do have a lot of older people who do rely on Social Security income.”
Finance Commissioner Sawin Millett said it was a “game of Russian roulette that we don’t want to play on.”
But if congressional leaders and the president fail to come up with a plan by Tuesday, Millett said, the state could use the treasurer’s cash pool on a “day-to-day basis, even perhaps on a week-to-week basis” to get by.
He said that approach could only last for two to four weeks, however.
“Anything beyond that and I wonder whether or not we would want to allow programs to continue to operate. I sincerely hope that we don’t find ourselves in that predicament,” he said.
Rebekah Metzler — 620-7016
rmetzler@mainetoday.com
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