Maine’s Spending Slower Than Personal Income Growth

MECEP Releases 2007 Revenue & Spending Primer
Wednesday December 12th, 2007
Ed Cervone

The Maine Center for Economic Policy (MECEP) released its Annual Revenue & Spending Primer, a roadmap to state, municipal and county government revenues and expenses, just in time for this year’s budget discussions. The state currently faces a projected $95 million shortfall (1.5% of total appropriations) making the budget most assuredly the top item for discussion when the legislature reconvenes in January.  Determining ways to close the gap will require analyzing both the revenue generating and spending sides of the Maine budget equation.

Each year, for the past four years, MECEP has been publishing the revenue primer as a valuable, credible, easy-to-use resource for legislators, government officials, business leaders, media outlets, advocacy groups and concerned citizens and taxpayers.  The primer provides, in one place, a simple, graphic overview of the state’s current revenues and expenditures.

“In light of the current budget deficit, we hope the Maine Revenue & Spending Primer can be relied on to provide a factual, logical overview of fiscal policy and assist legislators in their difficult deliberations,” states Christopher St. John, executive director of MECEP.

Some highlights from this year’s primer:
• Maine receives over one-third of its revenue (37%) from the federal government. Municipal government receives a third of its revenue (33%) from the state.

• Growth in state spending is due in large part to more federal dollars coming into Maine.

• Maine’s general fund spending has actually grown slower than statewide growth in personal income.

• K-12 education and health and human services account for 69% of General Fund spending.

• Maine’s lowest income households have the highest effective tax rate (17.5%) versus Maine’s wealthiest households (9.3%) due to the more significant percentage of their income spent on sales, excise, and property taxes.

The primer summarizes 2006 data and was written by Ed Cervone, former policy analyst at MECEP, currently employed at Maine Development Foundation.      
To discuss the information in this report, please contact Christopher St. John or Lisa Pohlmann at 622-7381.