Maine’s Private Sector at All-Time Low
Last Friday the U.S. Department of Commerce’s Bureau of Economic Analysis released their latest comprehensive revision of data back to 1969 as well as released the latest 2nd Quarter 2009 estimates (see next blog). Unfortunately, the new data brings a ton of bad news for Maine’s economy.
The revised 2008 annual data shows that Maine’s private sector share of personal income set a new all-time record low of 66.5 percent (click “continue reading” to view chart). The previous low point was set in 1975 at 66.6 percent.
Looking more deeply into the data reveals that it was personal current transfer receipts (PCTR) that was most responsible for this dramatic decline in the private sector. In 2008, PCTR grew by an astounding $1.031 billion–or 11.8 percent. In absolute dollars this is a new record which was set only a few years earlier at $653 million in 2005.
The growth in PCTR was driven by Medicaid which accounted for 57 percent of the growth ($591 million). This too was a new record in absolute dollars with the previous record set in 2005 with an increase of $411 million.
With this better understanding of the state of Maine’s economy, it is no wonder that the state government just got word that the two-year budget deficit just grew by another $200 million. Government has been crowding-out the private sector for so long that the private sector’s ability to pay taxes is waning at an alarming rate.
This new data should seriously worry Mainers as there is a significant correlation between the size of the private sector and overall economic well-being. This also shows why Maine needs a Taxpayer Bill of Rights in order to slow this runaway government spending.