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Log inState sees revenues declining
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State sees revenues declining
by Outspoken on Mon Nov 17, 2008 6:48 am
State sees revenues declining
Property values falling along with tax income
By Mal Leary
Capitol News Service
Bangor Daily News
AUGUSTA, Maine — Maine governments are facing a triple whammy in the current recession, with the three major sources of revenue for state and local governments all in decline, as well as other revenues, something that has not happened in decades.
“We are seeing the income taxes, the sales taxes and property values all go down in this downturn,” said Maine Revenue Service chief analyst Mike Allen. “We have not seen that in a long time.”
But, he said, Maine may not be as hard-hit as some other states. He said history indicates Maine tends to take longer to feel the effects of a recession, and that the impacts are not as deep but tend to last longer in the state.
“That’s true,” said University of Southern Maine economics professor Charles Colgan. “But, we don’t know if that will be the case this time.”
Colgan also serves as chairman of the Consensus Economic Forecasting Committee. That state group is projecting wage and salary employment will be down seven-tenths of a percent in 2009, but will start to grow in 2010.
The state gets more than two-thirds of its revenue from income taxes and the sales tax, and neither is meeting projections made in June. Allen said state revenues will be as much as $150 million below estimates for this budget year, and that could grow if efforts to stabilize the national financial markets are not successful.
“While there are differences in Maine, the national trends are still the big force in Maine’s economy,” he said.
Both Colgan and Allen said what makes this recession more difficult for state revenues than the 2001 or 1991 recessions is that in both only one of the major taxes took a big hit.
“In 2001, we certainly took a big hit on the income tax,” he said, “but sales tax revenues held us up. Interest rates were low, there were big promotions to sell cars, and people were still buying things. That is not true this time.”
http://www.bangordailynews.com/detail/93398.html
Property values falling along with tax income
By Mal Leary
Capitol News Service
Bangor Daily News
AUGUSTA, Maine — Maine governments are facing a triple whammy in the current recession, with the three major sources of revenue for state and local governments all in decline, as well as other revenues, something that has not happened in decades.
“We are seeing the income taxes, the sales taxes and property values all go down in this downturn,” said Maine Revenue Service chief analyst Mike Allen. “We have not seen that in a long time.”
But, he said, Maine may not be as hard-hit as some other states. He said history indicates Maine tends to take longer to feel the effects of a recession, and that the impacts are not as deep but tend to last longer in the state.
“That’s true,” said University of Southern Maine economics professor Charles Colgan. “But, we don’t know if that will be the case this time.”
Colgan also serves as chairman of the Consensus Economic Forecasting Committee. That state group is projecting wage and salary employment will be down seven-tenths of a percent in 2009, but will start to grow in 2010.
The state gets more than two-thirds of its revenue from income taxes and the sales tax, and neither is meeting projections made in June. Allen said state revenues will be as much as $150 million below estimates for this budget year, and that could grow if efforts to stabilize the national financial markets are not successful.
“While there are differences in Maine, the national trends are still the big force in Maine’s economy,” he said.
Both Colgan and Allen said what makes this recession more difficult for state revenues than the 2001 or 1991 recessions is that in both only one of the major taxes took a big hit.
“In 2001, we certainly took a big hit on the income tax,” he said, “but sales tax revenues held us up. Interest rates were low, there were big promotions to sell cars, and people were still buying things. That is not true this time.”
http://www.bangordailynews.com/detail/93398.html
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