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August 2, 2024

$93.5 million surplus demonstrates State's good fiscal health but continues year-over-year trend of declining surpluses, consistent with flattening of revenues as projected by the nonpartisan Revenue Forecasting Committee

AUGUSTA, Maine €“ The Department of Administrative and Financial Services (DAFS) announced today that the State of Maine has ended the 2024 Fiscal Year in the black with a $93.5 million General Fund surplus.

While the surplus demonstrates that Maine's fiscal health remains strong, it also continues a year-over-year downward trend of surpluses, which is consistent with a trend of flattening revenues as projected by Maine's nonpartisan Revenue Forecasting Committee (RFC). For example:

• In Fiscal Year 2022, surplus was $595.1 million.
• In Fiscal Year 2023, surplus was $141 million.
• In Fiscal Year 2024, surplus is now $93.5 million.

In March 2024, the Revenue Forecasting Committee projected that the State of Maine's revenues will remain relatively flat through the next biennium (Fiscal Years 2026-2027) after several years of strong growth that peaked in Fiscal Year 2022. In fact, revenues are not expected to reach the same level they were in Fiscal Year 2022 until at least Fiscal Year 2026.

In the wake of flattening revenues, Governor Mills and Commissioner Figueroa have consistently urged fiscal restraint and have called for a cautious approach to the State budget.

The Revenue Forecasting Committee is expected to meet next in December 2024.

"Thanks in part to our strong fiscal management, additional state funds will now be set aside to make child care more affordable for Maine parents and for transportation capital needs, among other important initiatives," said Governor Janet Mills. "My Administration will continue 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."

"The Governor's financial priority has always been to make sure that the State is on steady fiscal ground, that we are paying our bills and paying them on time, and that we are making important investments in Maine people in a sustainable way," said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. "This surplus continues to meet that priority and demonstrate the Governor's and the Legislature's responsible fiscal stewardship. 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."

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, through a process known as the "cascade." The accounts and amount of funding distributed, in order of priority as defined in statute, are as follows:

1. $2.5 million to Reserve for Operating Capital

2. $110,677 Governor's Contingency Account (to restore to statutory maximum of $350,000)

3. $1 million to FAME Loan Insurance Reserve

4. $2 million to Retiree Health Insurance

5. $12.9 million to Maine Child Care Affordability Program

After priority transfers are met, Maine statute requires that the remaining General Fund surplus funds be divided into an 80/20 percent split and dedicated next to the Budget Stabilization Fund, also known as the Rainy Day Fund, and then to the Highway and Bridge Capital Fund.

The 2024 fiscal year-end balance of the Budget Stabilization Fund is $968.3 million. Because the Budget Stabilization Fund remains at the statutory maximum for the Fiscal Year, no funds were transferred through the cascade. Therefore, the nearly $75 million in remaining surplus was transferred for the use of transportation capital needs.

Under the leadership of Governor Mills and Commissioner Figueroa, the State of Maine continues to remain on solid fiscal footing, with repeated surpluses and balanced budgets every year, as required by the Maine Constitution. In addition to a strong Rainy Day Fund, Moody's upgraded Maine's credit rating from Aa2 to Aa1, their second highest possible rating, while S&P affirmed their AA rating earlier this year.

Further, Maine's gross domestic product has experienced the strongest growth in New England and outperformed the economic growth of larger states like California, New York, and Virginia. Maine has experienced more economic growth over the last four years than it did in the preceding fifteen.

For the complete cascade as prescribed in law, please click HERE.

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