Following its November 23 meeting, the Maine Revenue Forecasting Committee (RFC) upgraded the state’s General Fund revenue forecast. The RFC projected revenue would increase approximately $822 million, or 9.7%, for fiscal years 2022 and 2023.
The RFC revised its projections following a November 1 report from the Consensus Economic Forecasting Commission (CEFC), an independent group of economists that meets twice yearly to forecast Maine’s economy. The CEFC looks at wage and salary employment, personal income, the Consumer Price Index, and corporate profits to make its forecasts.
In a press release celebrating the projected increase, Gov. Janet Mills’ office said “[p]rudent fiscal management, Federal pandemic relief, and rising prices,” are expected to increase General Fund receipts despite flat tax rates.
“Throughout my time in office, my Administration has responsibly managed Maine’s finances and budget, and this projected increase in revenues is a testament to that success as well as the support of Federal pandemic relief. In fact, under my tenure, the Rainy Day Fund has doubled to a record high and Maine’s GDP growth has not only fully recovered from the pandemic, but has surpassed pre-pandemic levels,” Mills said in a press release.
Mills said she would like to “examine ways we can use this additional revenue” to help Maine residents and announced her administration will use the projections to craft a supplemental budget proposal “in the coming weeks.”
The Mills administration also touted steps it took in the fiscal years 2022 and 2023 biennial and supplemental budget to lower local property taxes for lower-income and middle-income households. These include fulfilling the state’s obligation to pay 55% of education costs, increased revenue sharing with municipalities and the $285 disaster relief payments for Mainers who worked during the early days of the pandemic, which the state recently began disbursing this month.
Following the RFC’s upward revision of the General Fund revenue forecast, Republicans in the Senate and House of Representatives also issued a press release responding to the news and repeating calls to return some of the surplus to Maine residents.
Republicans touted their role in securing the $285 disaster relief payments and said they are ready to work with Mills in an effort to return the additional revenue to taxpayers.
“Legislative Republicans fully support giving money directly to Mainers, and will work collaboratively and in good faith with the Governor and Democrats who control state government to return money to the people,” Republican leaders said in the press release.
Before the latest upward revision of the General Fund surplus, Republicans were advocating for returning money to Maine residents. Sen. Jeff Timberlake (R-Turner) was the voice of Senate Republicans “Give It Back” plan to return some of the revenue surplus to Mainers.
Timberlake also sponsored a legislative request titled “An Act to Give Back Excess Revenue to the People of the State of Maine” that was recently shot down by the Legislative Council. The bill would have required 50% of the state’s excess monthly revenue to go into an account that would be returned to Maine taxpayers when it accrued $150 million.
A similar piece of legislation, sponsored by Rep. Jeff Hanley (R-Pittston), was carried over from the 130 Maine Legislature’s first session. LD 237 would transfer 75% of revenue in excess of the amount necessary for the state to fulfill its obligation to be returned to Maine taxpayers on a pro rata basis based on 2020 tax data.
The CEFC report which caused the RFC to revise its projections upward was based on mostly “optimistic” projections for the next few years. The CEFC noted it is concerned about new COVID-19 variants and uneven economic recovery from the pandemic, but anticipated public health concerns will “subside with the continuation of vaccine rollout.”
The CEFC also noted that federal stimulus and low interest rates have “boosted consumption and aided in the economic recovery.” The commission noted its optimism about migration into the state in several places in its report.
The CEFC forecast revised its projections for nonfarm employment levels slightly upwards from 2021 to 2024. It also slightly increased its forecast for personal income in 2021 through 2025.
Growth in wages and salaries was revised up for 2021 through 2024, while previous predictions it had made for 2025 were left unchanged
While the Consumer Price Index forecast was revised up for 2021 and 2022, the CEFC’s forecast through 2025 was left unchanged.
The forecast for corporate profits was revised upwards in 2021, but was revised down for 2022 and 2023. It further revised its forecast for 2024 and 2025 upwards.
