Lawmakers cautioned on revenue picture

AUGUSTA – State finance officials say gains by better-off taxpayers and by energy companies enjoying the effects of high oil prices have buoyed Maine tax collections, at least temporarily.

But legislative budget writers were told Thursday the longer-term view is generally pessimistic, especially if energy prices stay so high they drain away dollars available for more discretionary spending.

Already, according to Maine tax department expert Michael Allen, there has been a noticeable increase in taxpayers seeking payment plans to help them manage their liabilities.

Appropriations Committee members also were told a looming surplus for fiscal 2008, which ends June 30, would represent only a small variation from the standing budget forecast.

Lessening concerns somewhat was a written monthly report to the panel from Commissioner Rebecca Wyke of the state Department of Administrative and Financial Services.

“With the exception of Rhode Island, most states in the region are matching the slow economic growth of the U.S. economy,” Wyke wrote.

“A recent report shows that the metro-Boston economy, arguably the economic engine of the region, is holding up much better than other areas of the country. The New England region did not experience significant growth rates during the recent economic recovery and is therefore not expected to see a significant drop in economic activity over the next year.”

Wyke, however, added: “One area of concern for the state and the region remains high energy prices. New England is heavily dependent on home heating oil and with oil currently trading above $125 a barrel, the outlook for next winter is grim. While most energy analysts continue to believe oil prices will recede over the next few quarters, current forecasts for the price of oil during next winter exceed last winter’s prices.”

State officials say that General Fund revenue in April was over budget by $23.2 million or 5.3 percent, putting the General Fund for the first 10 months of the fiscal year over budget by $45.3 million or 2 percent.

“Most of the monthly and fiscal year variance (is) from stronger than forecasted individual income tax receipts,” Wyke wrote.

Officials said total taxable sales for the month of March, counted as April revenue, were down 5 percent from March 2007 and the annual rate of growth was 1 percent.

General merchandise sales – described as primarily sales of goods sold in large department and discount stores – were down 5 percent for the month and flat for the year, according to Wyke’s monthly report.