State of Maine ends Fiscal Year 2023 with a surplus, triggering funding to be distributed to the Budget Stabilization Fund and housing programs
Governor Janet Mills announced today that the State’s Budget Stabilization Fund, also commonly known as the Rainy Day Fund, has reached $968.3 million, a record high and the maximum allowed under State law.
The Fund reached its maximum after the State ended the 2023 Fiscal Year in the black with a $141 million surplus, triggering a “cascade” that distributed the surplus funding into certain accounts, including the Budget Stabilization Fund.
In addition to the $52.4 million distributed to the Budget Stabilization Fund, $65 million of surplus funding is being distributed to MaineHousing to address housing insecurity, as directed under the recently passed budget. $35 million will be used to build affordable rental units in rural Maine through the Rural Affordable Rental Housing Program, created by the Mills Administration and MaineHousing, while the remaining $30 million will be used to help incentivize the production of low-income housing through the Low Income Housing Tax Credit Program.
The $65 million was part of the historic funding dedicated to housing included in the recently passed budget and expands the $1.2 billion in public and private investment that has resulted in the production of nearly 4000 affordable housing units since the start of the Mills Administration.
Under State law, the Budget Stabilization Fund is allowed to reach a maximum of 18 percent of the Fiscal Year’s General Fund actual revenue from the most recently closed Fiscal Year, which, based on Fiscal Year 2023, amounts to $968.3 million. The maximum amount is recalculated annually.
Under Governor Mills, the Budget Stabilization Fund has grown by $758.4 million or 361 percent, positioning the State well in the event of any potential future economic downturn.
“Maine is better prepared today to withstand an economic downturn than at any other time in state history because of smart, deliberate financial choices by my Administration,” said Governor Janet Mills. “Since taking office, we have quadrupled the Rainy Day Fund and produced balanced budgets in partnership with the Legislature, all while making historic investments in Maine people to improve their lives and livelihoods. We will continue to work hard to deliver the resources and support that Maine people need to thrive and succeed.”
“The milestone of a fully funded Budget Stabilization Fund is a testament to the fiscally responsible leadership of the Mills administration,” said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. “Having these funds set aside positions the state to meet its commitments to Maine residents in the event of a rainy day.”
According to Maine State law, when year-end revenues exceed projections and result in a General Fund surplus that is not appropriated, those funds are allocated to certain accounts in order of priority – including the Budget Stabilization Fund – through the process known as the “cascade”. This year, the State Legislature established a fifth priority transfer to the Maine State Housing Authority as part of Governor Mills’ commitment to build affordable housing for Maine families.
After priority transfers are completed, the remaining funds are divided into an 80/20 percent split between the Budget Stabilization Fund and Highway and Bridge Capital Fund. Once the Budget Stabilization Fund hit its statutory maximum, as it did this year, excess revenues are transferred to the Highway and Bridge Capital Fund, in this case, resulting in an additional $3.9 million to the HBCF, for a total of $18 million.
This is in addition to a new Highway Fund budget law that will provide reliable and sustainable yearly funding of over $100 million dollars - directing 40 percent of the 5.5 percent sales tax on vehicle purchases and 40 percent of sales and use taxes from the Bureau of Motor Vehicles to the fund each year. This and other budget efforts give the state access to nearly $1 billion from Federal funds for Maine multimodal, highway and bridge repairs.