Revenue Forecasting Committee Confirms Relatively Flat Revenues through Next Biennium, Reaffirming Need to Save Money

RFC also projects additional one-time revenue for the current biennium driven by corporate tax revenues 

AUGUSTA, Maine – During its meeting earlier this week, Maine’s nonpartisan Revenue Forecasting Committee (RFC) confirmed that the State of Maine’s revenues will remain relatively flat through the next biennium (Fiscal Years 2026-2027), while recognizing approximately $108 million in additional one-time revenue in the current biennium (Fiscal Years 2024-2025). 

RFC reduced revenue projections for the next biennium by $3 million, confirming that revenues are remaining relatively flat after several years of strong growth that peaked in Fiscal Year 2022. This trend in revenues is consistent with that of other states which are now facing budget shortfalls. Governor Mills has proposed saving $107 million for the next biennium to avoid facing a budget shortfall given that revenues have leveled off. In fact, revenues are not expected to reach the same level they were in Fiscal Year 2022 until at least Fiscal Year 2026.  

Meanwhile, RFC also recognized an additional $108 million in one-time revenues in the current biennium. This increase in one-time revenues is primarily driven by strong corporate tax revenues, which can be volatile and should not be relied upon for a long-term budgeting outlook like individual income or sales tax revenues. Individual income tax revenues are not expected to reach the 2022 level until Fiscal Year 2027, and, adjusted for inflation, sales tax revenue is forecasted to decline each year starting in Fiscal Year 2025. 

Maine’s Constitution requires a balanced budget, which means the additional one-time revenue projected today will prompt the Governor to submit a change package in the coming weeks for the Legislature’s consideration. 

“The Revenue Forecasting Committee’s projections confirm what we have been preparing for – that revenues will remain relatively level through the next biennium, underscoring the importance of saving money now to meet our obligations in the future. These savings are important because, while revenues will remain largely flat, we know the costs of programs will increase in the coming years. We must take this into account now to avoid cutting later,” said Kirsten Figueroa, Commissioner of the Maine Department of Administrative and Financial Services. “At the same time, corporate tax revenues are driving significant additional one-time funding for the current biennium that will lead the Administration to introduce a change package in the coming weeks that will seek to invest prudently in immediate, urgent needs while ensuring we remain on steady fiscal footing in the coming years.” 

The RFC’s projections are based on the February 1, 2024  economic forecast from the independent Consensus Economic Forecasting Commission (CEFC) which revised its 2024 economic outlook for Maine based on strong year-to-date growth in employment and lower inflationary pressures yet showed a mix of salary and wage growth and reduction in the future. The RFC provided projections with and without consideration of the Transfer to the Maine Milk Pool as pending legislation may significantly impact this figure. The numbers included here do not include changes to the Transfer to the Maine Milk Pool.  

This revenue projection for Fiscal Years 2026-2027 will serve as the foundation for the next biennial budget.  

Earlier this month, Governor Mills introduced a supplemental budget proposal that invests in urgent needs to support Maine people while saving money to preserve the state’s long-term fiscal health. 

The Governor’s proposal – which is balanced as required by the Maine Constitution – funds previously announced initiatives to address urgent challenges, like housing, education, health care, the opioid epidemic and more. It also proposes saving $107 million to protect the State’s long-term fiscal health as other states face budget shortfalls. 

The proposal also takes crucial steps to strengthen disaster response following three devastating storms, and it funds public safety and mental health initiatives included in the Governor’s public safety legislation.