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Maine’s budget for general needs and transportation could see a funding gap of roughly $950 million during the next two-year cycle, according to the state’s latest projection that resulted in dire warnings Thursday from Republican lawmakers.
But those concerns from legislators who are in the minority of the Democratic-controlled Legislature leave out important context, such as how nearly all such reports in the last decade have projected a structural gap before lawmakers and the governor balanced the budget.
Still, the “Four-Year Revenue and Expenditure Forecast” from the Department of Administrative and Financial Services’ budget bureau that was unveiled Monday came after Democratic Gov. Janet Mills has previously urged lawmakers to exercise caution amid flattening revenue levels.
What’s in the latest report: The newest projection from the finance department, which is required by law to produce such a report every other year, features a General Fund structural gap of about $636.7 million and a Highway Fund gap of $312.5 million for the 2026-2027 cycle.
Finance Commissioner Kirsten Figueroa said the report should only serve as a “starting point” as state leaders “carefully identify the appropriate mix of policies and strategies that ought to be utilized in pursuit of a balanced budget.”
Many of the funding requirements considered in the report are routinely not met with legislative approval, Figueroa also said, noting “this report should not be considered an accurate reflection of an actual budget shortfall facing state government.”
Lawmakers who become part of the new Legislature following the November election must pass the next two-year budget in 2025. Democrats have controlled the State House since 2018, and election forecasters expect them to keep their majority this fall.
What lawmakers are saying: Republicans used talk radio on Thursday to blame Democrats for “excessive spending” and for passing budgets in the past few years without any GOP support, including an addition this spring that brought the current two-year budget to $10.4 billion.
Rep. Jack Ducharme, R-Madison, the top Republican on the Legislature’s budget committee, spoke critically of a mentality of “it’s good policy…we’ll figure out how to pay for it later,” during a Thursday morning WVOM appearance. On the show, he accused the Mills administration of removing spending “guardrails” that former Democratic Gov. John Baldacci implemented when facing a steep budget shortfall that resulted in cuts to numerous state services in 2009.
“BREAKING: Lead Appropriations Republican warns of $1 billion projected shortfall,” read the subject line of an email the House GOP office sent after Ducharme’s radio interview.
A spokesperson for Sen. Peggy Rotundo, D-Lewiston, the budget committee co-chair, said she was working on a statement not immediately available Thursday afternoon.
What’s the context: Department of Administrative and Financial Services spokesperson Sharon Huntley said Thursday it “is not uncommon, nor is it unexpected, that the biennial report projects a structural gap.”
“In fact, aside from 2022, every report from the past decade has projected a structural gap, and every two years the Legislature and the Governor have balanced the budget, as is required by the Maine Constitution,” Huntley said via email.
Upcoming revenue projections in December and any funding carried over from the current fiscal year will also factor into budget discussions early next year, Huntley noted while adding the report underscores Mills’ “prior warnings that revenues are flattening and budgeting should be done responsibly.” Maine ended the 2024 fiscal year with a $93.5 million General Fund surplus.
Two state bodies — the Consensus Economic Forecasting Commission and the Revenue Forecasting Committee — also released a “stress test” of sales and income taxes based on two recession scenarios, and it found Maine’s “rainy day fund,” which is almost maxed out at $908 million, contains enough money to help the state withstand nearly four years of a “moderate recession” and up to 18 months of a “severe recession,” Huntley said.
In any case, expect plenty of budget debates when lawmakers return to Augusta next year.
