State revenue reports for August were released on Monday and show the state is slightly over budget for the first two months of the fiscal year, but there could be trouble ahead with sluggish income and sales tax receipts.
While the state is essentially on budget right now, $11 million of the revenue appears to be an overstatement. More than $7.5 million is expected to be paid out in tax refunds to those applying through the Business Equipment Tax Reimbursement program and those lower-income homeowners and renters eligible for circuit-breaker rebates. Another $3.7 million in special revenue collected for the Department of Inland Fisheries and Wildlife will be transferred out of the general fund next month.
A truer picture emerges after those overstatements are taken into account.
Sales taxes for August, representing sales made in July, were below budget by $3.3 million and $3.2 million fiscal year to date.
Corporate income tax receipts were under budget by $5.6 million in August and under budget by $7 million fiscal year to date. September will be the telling month, since many corporations file their estimated tax payments then.
Individual income tax revenue is $6 million over budget for August and $5.6 million over for fiscal year to date, but that variance is from the Business Equipment Tax Reimbursement program and tax and rent refunds being below budget by $7.5 million – money that likely will be spent on those programs. Maine runs those refund programs through its individual income tax line.
Cigarette taxes combined with all other tobacco tax revenue was under budget by $543,000 in August and $921,000 fiscal year to date, but cigarette tax revenue alone is actually down by $1.4 million for the first two months. That shortfall was made up by higher collections on other tobacco products that are taxed at a much lower rate. They came in $500,000 over budget for July and August.
The highway fund, which is funded by the gas tax, was on budget for August and is $2.9 million below budget fiscal year to date.
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