With continued revenue increases in 2020 projected, Maine also is looking to spend more money, according to a new report.
Like many states in the union, the Pine Tree State expects to see higher revenues in the 2020 fiscal year, just as it did in 2019. Maine was one of 20 states that enacted a spending increase of more than 20 percent for the 2020 fiscal year, according to an analysis from the National Association of State Budget Officers (NASBO).
Last year, the state realized higher revenues in many categories, including lottery revenue and income taxes. While the state took in $63 million in gambling and lottery revenue in 2019, officials expect that number to dip to $57 million in the 2020 fiscal year.
The state collected more than $1.56 billion in sales taxes in 2019, exceeding the nearly $1.53 billion officials expected to receive. Similarly, Maine saw $1.7 billion in personal income tax collections, topping the $1.6 billion in expected collections, while corporate income tax collections similarly outpaced expectations ($253 million to $204 million).
Maine was one of four states that reported a change in its revenue-sharing payments for the fiscal 2020, increasing municipal revenue sharing with local governments to 2.5 percent. Meanwhile, under collective bargaining contracts, most employees will see a 3 percent cost-of-living adjustment and other benefit increases, while eligible employees receive a merit increase of approximately 5 percent.
Maine is also funding an expansion of its school lunch program, increasing the number of children who receive a free lunch. The state will provide reimbursements for the non-federal share of reduced or free lunch for children who are equal to or below 185 percent of the federal poverty level.
General fund spending nationwide is increasing by 4.8 percent in the 2020 fiscal year. In total, 45 states are planning spending increases, predicated on general fund revenue growth of 2.6 percent.
The spending increase comes after states grew their general fund spending by 5.8 percent in 2019, the fastest annual growth rate since 2007.
Nationally, lawmakers passed state budgets with an eye toward the future. States across the board are increasing their rainy day fund balances to improve their preparedness for a potential recession, and Maine is no exception.
In 2011, Maine had no balance in its rainy day fund, but that level increased to $45 million in 2012 and $93 million in 2014. In 2019, Maine reported its rainy day fund had a balance of $309 million, and that number will dip to $306 million in 2020, according to the report.
NASBO predicts revenue growth will likely continue throughout the 2020 fiscal year but at a somewhat slower pace, matching various economic forecasts.