Excise tax revenues, the second largest source of municipal revenues, showed strong gains in fiscal year 2014, which ended on June 30.
Across the Lakes Region, excise tax revenues, which are drawn from municipal vehicle registrations, have rebounded to pre-recession levels.
In Windham, excise tax revenues increased 7.5 percent to $2.83 million dollars, breaking the previous record of $2.74 million set in fiscal year 2006. Windham excise tax revenues bottomed out in fiscal 2012 at $2.44 million, and have sharply increased ever since.
In Standish, excise tax revenues grew by 6.5 percent to $1.54 million in fiscal 2014, surpassing the fiscal 2007 record of $1.52 million.
In Raymond, gains were more modest, increasing 2.25 percent to $809,800. The town’s excise tax revenues peaked at $812,800 in fiscal 2006, and bottomed out in fiscal 2010 at $713,700.
According to town officials, the extra revenue that exceeded budgetary expectations will go into surplus accounts.
The Windham Town Council budgeted $2.6 million for excise tax revenue in fiscal 2014, according to Town Manager Tony Plante. The extra $232,000 will go into surplus until fiscal 2016, Plante said. Last year, roughly $235,000 of extra excise tax revenue went to surplus, nearly making up for fiscal 2009, when excise tax revenues were $240,000 lower than expected. According to Plante, the extra funds could eventually be used to reduce the property tax burden or to finance capital improvements.
Charlie Colgan, an economist at the University of Southern Maine’s Muskie School of Public Service, said he was not surprised by the excise tax revenue increases. According to Colgan, they bolster an emerging picture showing increasing economy activity across the state. Since the excise tax is formulated based on the retail sales value of the registered car, Colgan said, it remains unclear what kind of cars Lakes Region residents are purchasing.
“The excise tax data is a little ambiguous as to whether people are buying more expensive cars or more cars,” Colgan said.
Windham’s Plante suggested that the excise tax revenues reflect an aging vehicle fleet.
“People can only hold onto cars just so long, and if they replace an old car with a newer car, even if it’s not brand new, the chances are the excise tax would be higher,” Plante said.
Whatever the reasons, town officials are rejoicing at the news of increased non-property tax revenues.
According to Town Manager Gordon Billington, the town of Standish received $100,000 more in excise tax revenues than projected.
“It is heading to our fund balance, which certainly helps us,” Billington said.
Plante noted that although municipalities lean heavily on the excise tax to supplement property tax revenues, towns have very little control over the revenue stream.
“Excise tax is an important thing for us to track because it’s the single largest source of revenue beyond property taxes,” Plante said. “It’s the second largest source of revenue we have. It’s also something we don’t have any control over. If, as we saw in 2008, excise revenue really falls off, it has an immediate impact on our finances.”
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