When the state’s economic experts meet Friday, they will have to decide whether two consecutive drops in corporate income-tax collections warrant readjusting the state’s forecast on how much money the Legislature really has to spend.
The numbers just in for January show corporate income-tax collections were down $1.6 million from a budget of $8 million. That follows a $16.9 million shortfall in December on a budget of $44 million. The budget in December was much larger than January because corporations typically increase their payments in the last month of the year.
The drop comes on the heels of a readjusted economic forecast in December, when an additional $86 million in total tax collections was recognized as being available to spend this fiscal year. Most of that money was spent in the supplemental budget just passed by the Legislature to get the state through the fiscal year, ending June 30.
Michael Allen of the Maine Revenue Service said the drop will be the topic of discussion on Friday when the Revenue Forecasting Committee meets, since other revenue lines are holding steady.
“I suspect that based on information we have today, there certainly will be a lot of discussion about bringing the corporate tax line down, even for this year,” Allen said.
A lower forecast also would affect the ongoing biennial budget discussions for the next two fiscal years because there would be less money to spend.
Allen said only one other state has seen its corporate income tax drop off, while other states and the federal government are continuing to enjoy robust collections. Allen declined to name the other state, saying discussions are confidential among other revenue offices, but did say it was “east of the Mississippi.”
It is possible the Revenue Forecasting Committee will wait until March 15 to make the final call on whether to bring corporate revenue projections down, Allen said, because that is the tax filing deadline for corporations.
“It may be worth waiting a few weeks,” he said, “to see how March 15 goes.”
Send questions/comments to the editors.
