Following its meeting today, Maine’s nonpartisan Revenue Forecasting Committee (RFC) is expected to upgrade the State’s General Fund revenue forecast for the current biennium, which ends on June 30, 2023, by $223 million. It is also upgrading revenue projections for Fiscal Years 2024-2025 by $71 million. As RFC finalizes its report in the coming days, these projections are subject to further adjustment.
While upgrading the projections, the RFC noted that, as expected, revenues are beginning to plateau and stabilize after several years of repeated, significant increases following the pandemic.
Maine’s Constitution requires a balanced budget, which means the additional revenue projected today will prompt the Governor to submit a change package to LD 258 for the Legislature’s consideration. LD 258 is legislation that includes the remaining budget initiatives for Fiscal Years 2024-2025 that were not included in the current services budget passed by the Legislature and signed by the Governor last month. Read a breakdown of those remaining budget initiatives.
The Governor said today that she will propose using ongoing revenue as a down payment on the Dirigo Business Incentive program, a newly proposed replacement for the outdated Pine Tree Development Zone program that will better reflect the current needs of Maine’s economy. The Governor also said she will propose using one-time revenues to bolster immediate needs, such as housing, food insecurity, emergency medical services, and infrastructure improvements to leverage enhanced Federal dollars.
“Maine continues to stand on strong fiscal footing thanks in part to our responsible approach to budgeting and our strategic investments that have supported Maine people, strengthened our economy, and led to record high savings,” said Governor Janet Mills. “Looking forward, we will continue to manage state finances prudently, live within our means, and bolster immediate issues, like housing, food insecurity, emergency medical services and other priorities. I look forward to working with the Legislature in the coming weeks on these issues.”
“We have long expected revenue to stabilize and have budgeted accordingly, leaving room to ensure that commitments by State government – like education funding, revenue sharing, and tax relief – can be honored into the future,” said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. “We will continue to take a responsible approach to our finances, meeting the challenges Maine people are facing while living within our means.”
The Department of Administrative and Financial Services expects to submit a change package on behalf of the Governor within the next two weeks.
The RFC’s projections are based on the April 1, 2023 economic forecast (PDF) from the independent Consensus Economic Forecasting Commission’s (CEFC) which indicated ongoing heightened uncertainty in economic conditions in the near-term but did not anticipate a recession in their forecast.
The remaining budget initiatives build on the current services budget that maintains 55 percent of the cost of education, fully restored revenue sharing with municipalities, and significant tax relief to Maine families. It comes after Governor Mills and the Legislature returned $474 million to Maine people through the Emergency Winter Energy Relief Plan, sending $450 checks to more than 875,000 Maine people, and, before that, $850 inflation relief checks and the $285 disaster relief payments.
Under Governor Mills’ leadership, Maine’s Budget Stabilization, or Rainy Day Fund, has grown to a record high of more than $900 million, nearly reaching its statutory maximum. Moody’s and Standard & Poor’s credit rating agencies have affirmed Maine’s Aa2 bond rating and for rating Maine’s debt as stable, even while downgrading ratings of other states, citing Maine’s governance practices and its reserves in the Budget Stabilization Fund.