Revenue Forecasting Committee Projects Flattening State Revenues through Next Biennium

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May 1, 2025

Committee projects a minimal one-time increase in State revenues for this year, followed by revenue declines over the coming two-year period

 

AUGUSTA, Maine €“ Following its meeting earlier this week, Maine's nonpartisan Revenue Forecasting Committee projected that the State of Maine's General Fund revenues will increase by $24.4 million for the fiscal year ending in June, but will decrease by $23.3 million through fiscal years 2026 and 2027.

These projections of flattening state revenues are consistent with the Committee's previous forecast from December 2024, and reflect past warnings from the Committee and the Mills Administration about the State's tightening financial environment and the need for responsible budgeting for coming years amid growing economic uncertainty.

While the State is now forecast to add $24.4 million in one-time revenues for FY25, this increase is largely driven by increased state tax revenues from tax year 2024 capital gains realizations, which are reflective of prior economic conditions and are unreliable for long-term budgeting.

The revenue forecast for FY26 shows a modest increase of $1.1 million, a decrease of $24.4 million in FY27, for a net decrease of $23.3 million over the biennium. Further out, the revenue forecasts for FY28 and FY29 expect reduced revenues of $2.9 million and $30 million, respectively.

                "This report from the Revenue Forecasting Committee reinforces the need for the State to budget responsibly for the coming years, especially given the widespread economic uncertainty of this moment and an unclear outlook on future Federal support. While we have undertaken necessary steps in Maine to meet our current financial obligations, sensibly planning ahead is now paramount," said Governor Janet Mills. "As the Legislature continues to work on budget proposals, I encourage them to focus on maintaining critical investments that will benefit Maine people today and into the future."

                "As expected, revenues remain level with this forecast, amid uncertainty and economic indicators that have elevated concerns about consumer hesitancy, stagnation, and recession," said Kirsten Figueroa, Commissioner of the Maine Department of Administrative and Financial Services. "This confirms the need for the balanced approach that is good for both Maine people and the fiscal health of our state, as the Governor set forth in her proposed biennial budget €“ investments to maintain core programs in education and health care, targeted revenue increases to benefit public health, and making tough decision to reduce certain programs - most of which are now before the Legislature for review and action."

In March, Governor Mills signed into law a $11.3 billion baseline budget to ensure the continued operations of State government for the next biennium, as well as provide one-time funding to pay hospitals, nursing homes and other health care providers for outstanding services and protect Maine forests from damage from the eastern spruce budworm €“ the most damaging forest insect in Maine and North America.

The baseline budget maintains the Governor's core commitments to Maine people, such as health care, upholding the State's share of education costs at 55 percent, ensuring free school meals for all Maine students, and maintaining municipal revenue sharing at five percent to stabilize property taxes and support municipal services. The Governor also signed supplemental and biennial budgets for the Highway Fund.

The remainder of the Governor's 2026-2027 biennial proposals continue to be reviewed by the Legislature through LD 210, the initial budget legislation introduced earlier this year.

The Revenue Forecasting Committee's projections are based on the April 1, 2025 economic forecast from the independent Consensus Economic Forecasting Commission. The Commission made minor changes overall to its forecast, focusing on updated projections for jobs and inflation.

A major theme of the meeting was uncertainty €“ particularly around federal policy, tariffs, and funding. Because of this uncertainty, the Commission noted that if new information becomes available, they may meet before their next scheduled update on November 1, 2025.

The Revenue Forecasting Committee, in its forecast, also specifically noted increased consumer and business hesitancy stemming from the tariff policies of the Federal administration.

Under Governor Mills' leadership, Maine's Budget Stabilization Fund stands near its statutory maximum at approximately $937 million, up from the $210 million when the Governor took office. In 2024, Moody's Investor Service upgraded Maine's credit rating to Aa1, their second highest possible rating, while Standard & Poor's  affirmed Maine's Aa2 bond rating.