Revenue Forecasting Committee Projects Additional $411.6 Million in Revenue for Current Biennium; Warns of Significant Long-Term Economic Volatility and Uncertainty in Projections

Following its meeting today, Maine’s nonpartisan Revenue Forecasting Committee (RFC) is expected to upgrade the State’s General Fund revenue forecast by approximately $411.6 million for the current biennium, which ends June 2023. At the same time, RFC also expressed significant concern about shifting economic conditions, calling the fiscal environment “uncertain” and “variable” and noting that the accuracy of their forecast becomes less reliable in future years, leading them to urge caution in use of the revenues.

“The State of Maine continues to be in the black as a result of strong Federal support and the good fiscal management of my Administration and the Legislature. However, economists are also warning us that revenues, particularly those in later years, are volatile and should not be counted on,”said Governor Janet Mills. “Given that, and knowing that Maine people are grappling with inflation, I will propose giving back at least half of this additional revenue to the taxpayers, consistent with my current proposal and consistent with the calls of Republicans, along with other fiscally responsible ways we can support Maine people through these challenging times.”

“These new revenue projections come during uncertain economic times nationally. Just in the last weeks, the cost of oil has increased from $72 to over $100 per barrel, inflation as measured by the Consumer Price Index has reached its highest point in 40 years, and Russia has invaded Ukraine, with potentially significant implications for both energy prices and financial markets. We will carefully monitor actual revenues relative to these new projections,” said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. “In the meantime, we will follow the advice of experts economists and act prudently and cautiously, delivering much-needed relief to Maine people and maintaining a balanced budget.”

Maine’s Constitution requires a balanced budget, which means that these new revenues will prompt the Governor to submit for the Legislature’s consideration a change package to the supplemental budget proposal she introduced last month.

In the forthcoming change package, the Governor will propose adding at least half of the new revenue forecasted by RFC today – $205.8 million – to the $411 million she previously proposed to give back to Maine people through direct checks, consistent with the calls of Republican lawmakers (PDF). This will bring the Governor’s proposed giveback to at least $616.8 million, which would result in about $750 in relief to an estimated 800,000 eligible Maine taxpayers, beginning as soon as July, if approved by the Legislature.

The RFC’s projections are based on the February 1, 2022 economic forecast (PDF) from the independent Consensus Economic Forecasting Commission’s (CEFC). RFC members noted during today’s meeting that, in addition to the long-term economic uncertainty, projections for later years are already less optimistic. For example, while the projection for Fiscal Years 2024-2025 was increased today by$360.8 million, it is nonetheless a drop of more than $50 million from the current budget cycle to the next.

If approved by the Legislature, Governor Mills’ supplemental budget proposal would:

• return half of the state’s surplus to Maine taxpayers via direct checks,
• deliver crucial tax relief to working Maine families and seniors,
• provide two years of free community college to pandemic-impacted students to strengthen Maine’s workforce,
• overhaul the State’s student loan repayment program into a nation-leading debt retirement tool, and, among other things,
• provide additional assistance for Maine hospitals and nursing homes.

It would also set aside additional money in the Budget Stabilization Fund, surpassing half a billion dollars in savings – a record high – and provide $100 million to the Maine Department of Transportation to fix roads and bridges, preventing the need for a transportation bond for the first time in years.

The Mills Administration and the Legislature have already returned $371 million to Maine people and Maine businesses, including sending $285 checks to more than 500,000 hardworking men and women and providing $222 million in tax relief for Maine people and businesses.

Taken in combination with the currently enacted State budget and the Maine Jobs & Recovery Plan, the Governor continues to tackle the state’s most pressing problems, including pandemic-driven inflation and the state’s longstanding workforce shortage, which is hampering the ability of employers to find employees.

Additionally, Moody’s and Standard & Poor’s credit rating agencies have cited Maine’s governance practices and its reserves in the Budget Stabilization Fund as grounds for reaffirming Maine’s Aa2 and AA bond ratings, respectively, and for rating Maine’s debt as stable during the pandemic, even while downgrading ratings of other states.