How the pandemic sugar high led to Maines budget crunch [Video]

During the pandemic, the federal government moved aggressively to shore up the economy as people were told to stay home and businesses closed temporarily, raising concerns about widespread economic hardship and a possible recession.

Congress spent trillions of dollars to prevent an economic crash. Direct financial relief was sent to individuals. People who lost their jobs received enhanced unemployment benefits. Businesses received funding to pay their employees, even though their doors were closed. And state governments received money to respond to the pandemic and other concerns.

It worked. In the first two years of the pandemic, increasing incomes and consumer spending in Maine fueled a 35% increase in annual state tax revenues, from nearly $4 billion to nearly $5.4 billion.

“Those increases were really unprecedented,” said Mike Allen, the state’s associate commissioner on tax policy. “The other crazy thing about the growth rate was we were cutting taxes during that …