AUGUSTA, Maine — The state concluded the 2015 fiscal year in June with a $59 million surplus and more than $111 million in its rainy day fund, according to a news release from Gov. Paul LePage.
The unappropriated surplus results from tax and fee revenues collected by the state that exceeded the state’s appropriations limit. After a year-end process known as the “cascade,” which funnels some excess revenues to a variety of programs, about $24 million remained in the surplus. That money has been deposited into the Budget Stabilization Fund, which also is known as the rainy day fund.
LePage, who has long advocated for more deposits in the rainy day fund, said he was pleased with the increase but that it still isn’t enough. The fund is basically a savings account for the state that is meant to support government programs when revenue collections erode.
“While I’m pleased to see the Budget Stabilization Fund surpass the $100 million threshold, the current balance is too low of a reserve for a state that spends more than $3 billion annually,” said LePage in a written statement. “National credit agencies have warned Maine of the importance of increasing available financial reserves, and I am committed to increasing the balance of the budget stabilization fund.”
Still this year’s surplus and the growth in the rainy day fund is largely the result of policies enacted over LePage’s vetoes, a top legislative Democrat said Tuesday.
“It’s ironic that the governor would try to take credit for something he absolutely refused to be a part of,” said Sen. Linda Valentino, D-Saco. “In fact, he went out of his way to reject and veto our efforts.”
Valentino, who serves on the Legislature’s budget-writing Appropriations Committee agreed with LePage the latest forecast was “good news.”
“But the credit goes to the fact that we have a rebounding economy coupled with a fiscally conservative approach by the state’s budget-writing committee,” Valentino said.
Senate President Mike Thibodeau, R-Winterport, also agreed the surplus and increased reserves represents good news for a state that in recent years has struggled with revenue shortfalls.
Thibodeau also said the Legislature’s long-term efforts to reduce taxes for most Mainers was paying off, and he touted tax cuts enacted in the current budget, which went into effect on July 1.
“Cutting taxes and easing the burden of government from Mainers’ shoulders is having a positive effect,” Thibodeau said, “and we are now clearly seeing the benefits of policies like the 2011 income tax cuts and the encouragement of business development. I am confident we will see the same positive effect from the income tax cuts enacted this year.”
In 2014, LePage blasted the Legislature for taking $21 million from the rainy day fund to reverse LePage’s proposal to eliminate revenue sharing with towns and cities. The governor refused to release more than $100 million in voter-approved bonds until the fund was restored to its previous level of $60 million. The Legislature enacted a supplemental budget in March 2014 that restored the fund to $60 million, prompting LePage to release some of the bonds, though he is still withholding $11.5 million from the Land for Maine’s Future program.
Maine’s rainy day fund went from a balance of nearly $129 million before the start of the great recession in 2008 to less than $200,000 in 2009. A 2014 report by the Pew Charitable Trusts found that in general, states are far too lax in maintaining savings and recommended that Maine and other states enact laws to force more money into stabilization funds. At the time, Maine ranked 32nd in the country in revenue volatility, meaning it was managing its savings better than most other states.
Earlier this year, the Legislature enacted some of LePage’s proposals to funnel more of the cascade to the rainy day fund and increase the targeted balance of the fund to 18 percent of annual General Fund revenues. In addition, the money in the cascade and the deposit to the rainy day fund, the state has $25.6 million remaining in unappropriated surplus, which has been budgeted to be spent this year.
“An improving economy, reliable forecasting and conservative cash management have all contributed to putting the state of Maine in a sound financial position entering the new fiscal year,” said Richard Rosen, Maine’s finance commissioner, in a written statement.
Sun Journal State Politics Editor Scott Thistle contributed to this report.