State revenue dips millions in October

AUGUSTA – Maine’s treasury took a $12.1 million hit in October as corporate income tax receipts fell nearly $8 million short of projections and taxes on estates and insurance companies were also well under estimate.

Sales tax revenue was also under budget by about $1 million, or 1.4 percent.

But despite the weak October showing, overall state revenue through the first four months of fiscal 2001 ran $7.8 million, or 1.2 percent, over budget.

State financial officials who released the figures suggested short-term economic activity would moderate from 1999 levels but sounded no alarms in last week’s monthly report.

“Early reports indicate that the holiday shopping season got off to a solid start,” said the report from Commissioner Janet Waldron of the Maine Department of Administrative and Financial Services.

“Most analysts expect holiday sales growth will be in the 4 percent to 5 percent range, down from the strong 7 percent increase posted last year.

“Consumer surveys show that higher interest rates, a declining stock market, higher oil prices and credit card debt will cause consumers to pull back a bit this holiday season,” the report said.

Officials attributed the October weakness in corporate income tax receipts to lower estimated and final payments and greater than anticipated refunds.

Although sales tax revenue was off for the month, it remained $5 million, or 2.1 percent, over budget since the July 1 onset of the fiscal year, when the sales tax rate was reduced from 5.5 percent to 5 percent.

Analyzing taxable sales by sector, officials said the building supply sector was up 13 percent for the month, and the general merchandise sector up 6 percent.

Sales in the business operating sector were reported down 3 percent for the month.

Individual income tax revenue in October was over budget by a slight 0.5 percent, but for the first four months of the fiscal year exceeded projections by $6.9 million, or 2.4 percent.

Officials said that October income tax revenue was $4.7 million, or 6.5 percent, over October 1999.

For the year to date, corporate income tax revenue was $8.9 million under budget, and October revenue was $8.3 million under October 1999.

While substantially off for the month, revenue from the taxes on estates and insurance companies were below budget for the year to date by only 1 percent and 2.8 percent, respectively.