Maine’s fiscal year ended last month with almost $600 million in surplus revenue, two-thirds of which has been added to the state’s budget stabilization fund, Gov. Janet Mills’ office announced Friday.
The so-called “rainy day” fund stands at a record $896 million after the approximately $400 million infusion. The total is 16.6 percent of the prior year’s revenues and just shy of the 18 percent maximum allowed under state law.
Additionally, $135.5 million from last year’s surplus will go toward highway and bridge funding and $15 million will go to a newly created education stabilization fund to help the state finance public schools at 55 percent.
“The state continues to operate in a fiscally responsible manner by building up the rainy day fund and preventing the need to bond for transportation projects,” Kirsten Figueroa, commissioner of the Department of Administrative and Financial Services, said in a statement.
With the extra money, the Department of Transportation now has an additional $291 million in general fund support for capital projects.
Under state law, the state must balance its budget. Any surplus each year must be allocated to certain accounts, the biggest of which is the budget stabilization fund that is meant to backstop against revenue loss during an economic crisis or other emergencies. That could come into play if the country falls into recession, which seems increasingly possible as federal regulators take steps to stem record inflation.
A high contingency fund balance also helps the state when it borrows money on the bond market because it helps fetch lower interest rates with strong scores from credit-rating agencies.
This is the second consecutive year of strong financial performance coming out of the pandemic. Last year, the Mills administration added $282 million to the rainy day fund.
Democratic leaders credited the administration for keeping the state’s finances stable at a time of uncertainty.
“For the past two years, my colleagues and I have worked hard to pass common-sense budgets that deliver for working families, communities, small businesses and retirees,” Senate President Troy Jackson of Allagash said in a statement. “At the same time, we continued to set money aside in the Rainy Day Fund for the future. As a result, Maine’s Rainy Day Fund is now at the highest it’s ever been in the state’s history – nearly $900 million. This historic number ensures that the Legislature will be able to keep its promises to Mainers regardless of what lies ahead.”
Republicans, meanwhile, have criticized the Mills administration for relying heavily on federal dollars, including hundreds of millions in pandemic relief, to present a rosier financial picture.
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