AUGUSTA – The Department of Administrative and Financial Services (DAFS) announced today that the State of Maine concluded Fiscal Year 2019 with an unappropriated surplus of $167.8 million.
After accounting for a budgeted balance forward of $139.2 million and four priority transfers to the Contingent Account, FAME loan insurance reserve, operating capital, and state retiree health insurance that total $5.85 million, DAFS transferred $18.1 million to the Budget Stabilization Fund (BSF) and $4.5 million to the Property Tax Relief Fund for Maine Residents. The balance in the Property Tax Relief Fund for Maine Residents is $32.9 million, which will trigger a relief payment of at least $100 to the property tax payer for each homestead in the State.
“The State of Maine is in a strong economic position,” said DAFS Commissioner Kirsten Figueroa. “The Mills Administration has invested in health care, education, and property tax relief for Maine people, has put millions of dollars into the Budget Stabilization Fund, and is prioritizing paying off the previous administration’s debt to the federal government for Riverview. With this surplus, we are continuing to put more money into the Budget Stabilization Fund and are positioned to provide further property tax relief.”
With the final priority transfers, the balance in the Budget Stabilization Fund is $236.9 million, which represents six percent of total General Fund revenues and 34 percent of the statutorily authorized maximum balance. There is an additional $60.3 million in funding reserved for the Riverview Psychiatric Center. These funds have been set aside, on a bipartisan basis, to pay back the federal government for the state’s use of federal funds during the period of Riverview’s decertification. The Mills Administration will be using these funds for the purpose for which they were intended: to get the state out of debt to the federal government. Meanwhile, Riverview was recertified by the federal government in February, dating back to January 2019, finally putting an end to the state’s accrual of debt owed to the federal government. In all, the State carried financial reserves totaling $341.6 million into the new fiscal year.
The State of Maine’s cash reserves and well-organized financial management should allow the General Fund to operate throughout Fiscal Year 2019 without internal borrowing or other mid-year adjustments.
About the Budget Stabilization Fund
The Budget Stabilization Fund was created in 2003. The Fund replaced the Rainy Day Fund, which was created by the Legislature in 1985 to repay outstanding General Fund bonds and to support major construction projects.
The Budget Stabilization Fund acts as the State of Maine’s savings account. It is a reserve balance that is set aside in good economic times to protect the state budget from the volatile changes in revenues that can occur when the economy unexpectedly slows. The goal of the Fund is to reduce the effect on the operation and services of state government and prevent policymakers from increasing taxes during sudden economic downturns.
In Governor Mills’ biennial budget change package, she asked the Legislature to appropriate $20 million to the Budget Stabilization Fund. They ultimately dedicated $5.3 million which, when combined with the $18.1 million the Mills Administration is adding, amounts to $23.4 million saved in the Budget Stabilization Fund since Governor Mills took office.