Maine Center for Economic Policy -The year-end surplus is a function of two things. Revenues coming in higher than expected and/or spending being less than expected. Maine’s Constitution requires a balanced budget, so a modest surplus is a signal that the state’s finances are healthy.
State budgets are built based on a revenue forecast compiled by the state’s Revenue Forecasting Committee. The state revenue forecast tries to predict how economic fluctuations in wages, income and employment will affect the amount of money the state raises through taxes and fees. Surpluses are common because the Committee generally errs on the side of reasonable caution when it releases its predictions twice a year. Only twice in the last 20 years has the state closed a fiscal year with revenues below projections and both times were following a recession.
No comments:
Post a Comment