State Surplus Tops $49 Million
Maine has ended the 2014 budget year with a surplus of $49.1 million, with about half that from higher than expected individual income tax revenue.
Finance Commissioner Richard Rosen said the state surplus is made up of revenues above estimates of just over $39 million with the rest coming from unspent balances in accounts scattered across state government. He said it is good news and shows the state’s nonpartisan revenue projection process is working.
"So the income tax story has been a positive one, the corporate is a positive, the sales tax line is coming on pretty much on target, but slightly, slightly below," Rosen said. "So if you look at the whole picture for the year, year-end in terms of the forecasts, the total came in within one point of forecast. It was 99 percent accurate."
The individual income tax was $24.4 million above estimates for the year and the corporate income tax was $13.2 million above projections.
Rosen said the lapsed balances are the result of good fiscal management by the LePage administration. But Rep. Peggy Rotundo, a Lewiston Democrat who co-chairs the Appropriations Committee, points out the budget that led to the surplus was passed by a bipartisan legislature without the governor’s support. And she worries the numbers are not painting a picture of a strong economy.
"Corporate profits are up by 7.8 percent and some individuals in the state are clearly doing better, but if you look at the sales tax line, which to me is a measure of discretionary funding for the average Maine working family, it’s below projections," she said.
Rotundo said that the sales tax has not met projections for three months in a row. Rosen said while that is true, the projection is a tenth of a percent below estimates and he said Maine is not alone with several states reporting soft sales tax revenues.
The sales tax was below projections for the year by $1.2 million with an estimated total for the year of $1.1 billion.
Both Rotundo and Rosen said the surplus should not be considered "excess" cash on hand. Most is going to various reserve accounts including $20 million set aside to meet potential budget problems in the Department of Health and Human Services in the current budget year.
“I am proud of the fiscal responsibility that our bipartisan budget and the Legislature demonstrated in the cascade as we put aside the 20 million for the future, Rotundo said. “We have substantially increased reserves for the state in a budget that the governor vetoed.”
The next largest sum is $10.25 million that goes to fund a one-time cost of living allowance of 1.8 percent for retired state workers. Rosen said he was in the 125th Legislature that passed the legislation setting up one-time payments for three years from state surplus funds.
“That mechanism successfully funded all three years, 2012, 2013 and 2014,” Rosen said. “After this year the traditional model will kick in.”
The surplus also provides $3.5 million for a fund to provide additional property tax relief.
Rosen said the budget surplus law provides another $8.5 million for the budget stabilization fund, often called the rainy day fund. When that fund and other cash reserves are combined, the state now has total reserves of $93.2 million.
Twelve and a half million dollars is left unspent and unallocated for future use.