Making up ground
Revenues continue upswing
- $50M surplus predicted
- Unemployment still a concern
State revenues in May were $15 million over estimates and Maine is expected to end the budget year on June 30 with a surplus in excess of $50 million.
“It’s good to see revenues coming in higher,” said Finance Commissioner Ryan Low. “We went through a long period there when it was all bad news.”
Sales tax revenue in May again came in above estimates, by $5.5 million more than expected, bringing overall sales tax to $11.8 million more than projected for the year. Until April, the sales tax had failed to meet projections for 18 months. “To see back-to-back months above projections is certainly a good thing and shows there is some consumer confidence out there,” Low said. “But you have to look at this in context of how far down we still are from the past.”
Key areas of consumer sales and general merchandise continue to bring in fewer dollars than they did a year ago. Food store sales, for example, totaled $105 million this April, compared to $110 million in April of 2009.
The sales tax has brought in $735.4 million while personal income tax totals $1.1 billion, beating estimates by an overall $11.8 million. Those taxes represent the two largest sources of state revenues.
The corporate income tax was projected to bring in just under $2 million in May, but actually came in at $5.4 million, bringing the year-to-date total to nearly $20 million above estimates. “Some of these large corporations are really doing well,” Low said. “The corporate income tax continues to come in way better than we projected.”
Based on revenues collected to date, the state will end the budget year this month with a surplus of at least $50 million, including “several million dollars” in appropriated but unspent funds, Low said.
While the revenue picture seems to be improving, Low remains cautious, as mixed signals continue at the national level. “Unemployment continues to be higher than what is expected in a recovering economy,” he said. “That has to be a worry.”
Sen. Richard Rosen, R-Bucksport, the GOP senator on the appropriations committee, said while the surplus projection is good news, it will fall far short of what is needed by the next legislature, with sluggish growth and the loss of recovery act funding. “The revenues are meeting the new, lowered re-projections,” he said. “We have a long way to go to get back to where revenues were before the recession started.”
Skilled worker shortage predicted
- Study warns of shortfall in 2018
- Industry certifications highlighted
Maine will not have the skilled workers it needs for the jobs available in 2018, when economists predict the nation will be over the recession, according to a national study.
The study by Georgetown University, which examined individual states and the nation, projects that 63% of jobs nationally will require at least some postsecondary education in 2018. Employers will need 22 million new workers with postsecondary education, both four-year and two-year degrees. And every year between now and 2018, there will be a deficit of 300,000 college graduates, the report found.
“This study by Georgetown University tracks with what we have been looking at here in Maine,” said John Dorrer, director of the Maine Department of Labor’s Center for Work Force Research and Information. “This is something we need to act on now, and not wait until people in business can’t find the skilled workers they need.”
The study indicates that 59% of all jobs in Maine by 2018 will require education beyond high school, a little below the national average of 63%. The growth in jobs for the college educated will be dramatically higher than for jobs requiring only a high school diploma. In 2018, the study projects Maine will need 136,000 workers with a two-year degree and 128,000 with a four-year degree.
Dorrer said the Maine-specific numbers in the study are close to the figures he has developed at the state level. Substantial gains in employment will not occur until 2011 and it will likely take until 2015 for job creation to catch up to pre-recession levels. “Maine, like the rest of America, will need more college-educated workers than it will have,” he said. “It’s a problem that needs to be addressed now, because it takes time to solve.”
The study also reveals a need for workers without a degree to improve their skills through industry-led certification programs. Blue-collar jobs like equipment repair and installation will increasingly require worker competency through a certification process, Dorrer said. “We are seeing that grow in a lot of fields today, and it will grow,” he said. “Employers are going to demand proof of skills and competency.”
While other states have growing populations, including from significant in-migration, Maine does not. “We have more of a challenge in front of us,” Dorrer said. “With Maine being the oldest state in the nation and with slow population growth, we are going to have to figure out how to replace basically the most skilled labor force we have ever had on the field.”
Delegation eyes finance reform
- Bail out protections sought
- Lawmakers could act this week
While Congress continues its attempts to reach a compromise on federal financial reform, Maine’s lawmakers are keeping a close eye on provisions they want to see included.
The Senate and House have passed different versions of financial reform bills. Just before a conference committee began its work in early June, Democrats released a 1,974-page text as a basis for negotiations. While it is mostly modeled on the Senate version of the bill, it includes several provisions from the House bill.
Still undecided are three key provisions: an amendment that would require banks to spin off their derivative operations, the so-called “Volcker rule” that would prohibit banks from trading their own holdings, and a provision that would create a $150 billion fund to the costs of handling bankrupt financial institutions.
U.S. Rep. Mike Michaud, who voted for the House bill, said consumer protection and increased transparency of financial instruments packaged and sold by banks and other financial institutions will be key to gaining his vote. “We have to bring an end to the too-big-to-fail institutions that have to be bailed out by the taxpayers,” he said.
U.S. Rep. Chellie Pingree, who also voted for the House bill, said the final measure has to ensure taxpayers never have to bail out large financial institutions again. “I am very supportive of [a] consumer protection agency,” she said. “I think the people need to know there is someone looking out for consumers in this country, not just Wall Street and big banks.”
Sen. Susan Collins, who once served as Maine Commissioner of Business and Professional Regulation, introduced her own package of reforms last year. She said the measure needs to include three changes: a council on regulators that will look at the cumulative impact of bank and other financial institutions’ policies, improved transparency of various financial instruments and greater reserves by lenders.
Sen. Olympia Snowe said the reforms must target those in the business of lending, not Americans in business who may be involved indirectly with lending.
Lawmakers hope to act on the compromise measure as early as this week.
Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz.
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