Maine ends fiscal year with nearly $94M budget surplus

(The Center Square) — Maine ended the fiscal year with a budget surplus of nearly $94 million, but Gov. Janet Mills is urging fiscal restraint when lawmakers begin working on the next spending package.

The state Department of Administrative and Financial Services announced the surplus revenues on Friday, attributing the extra money to "responsible fiscal stewardship" by the Mills administration and state lawmakers.

However, the state agency warned that while state revenue collections exceeded expectations, Maine needs to keep a tight grip on its purse strings, given the uncertain economic outlook.

"With revenues flattening, we will work closely with the Legislature in the coming years to ensure that spending does not exceed available resources and that we continue to remain in the black," Revenue Commissioner Kirsten Figueroa said in a statement.

Mills echoed those sentiments, saying she plans to "keep a close eye on revenues, recognizing that they are leveling off, and work to ensure that the state remains on sustainable, solid fiscal footing in the years to come."

State budget writers say revenues are not expected to hit the record high seen in fiscal year 2022, when the surplus was $595.1 million, for another few years.

That mirrors concerns raised earlier this year by the state’s Revenue Forecasting Committee, which projected revenues will remain flat in the next two budget cycles.

The fiscal year 2022 surplus allowed the state to squirrel away another $400 million in its reserve fund, bringing its rainy day fund to $896 million, about 16% of the general fund revenues for that fiscal year.

Mills and lawmakers used a more than $400 million surplus in 2022 to pay for $750 relief checks for workers. They also tapped the surplus revenue to fix roads and bridges, boost spending on public education and pump more money into the state's retirement system.

However, the revenue forecasting committee raised concerns at the time about the impact of inflation and energy costs, warning that the state's overall economic outlook remains "uncertain" going forward.

Under a new state law, the budget surplus is required to be divvied up between several safety-net accounts, with any excess revenues after that deposited in the state's reserve funds. The process is referred to as "cascade."

Based on the current revenue estimates, at least $12.9 million will be diverted to the Maine Child Care Affordability Program; $2.5 million will be deposited in the operating capital fund, and the other $2 million will go to a retiree health insurance fund, according to the Mills administration.

In her preliminary budget plan, filed in April, Mills called for pumping $107 million in the state's savings as a means to protect Maine’s long-term fiscal health, but the move faced pushback from Republicans as well as fellow Democrats.

But lawmakers cut her savings plan in half in the final budget plan, diverting only $30 million for the Education Stabilization Fund and $23.5 million for the MaineCare Stabilization Fund.