Maine ended the 2024 fiscal year with $93.5 million in surplus revenue, a total that is much lower than the previous two years and part of a downward trend that has the Mills administration urging caution in upcoming state budget discussions.

The Department of Administrative and Financial Services announced the surplus Friday, saying that while it demonstrates strong fiscal health, the downward trend should call for restraint in new spending. At the end of the 2022 fiscal year, the surplus was a staggering $595 million; and in 2023, the state earned $141 million more than it spent.

“My administration will continue to keep a close eye on revenues, recognizing that they are leveling off, and work to ensure that the state remains on sustainable, solid fiscal footing in the years to come,” Gov. Janet Mills said in a statement.

The state’s Revenue Forecasting Committee projected this spring that revenues would remain flat through the next biennium (2026-27), but that committee is expected to meet next in December and things could look different then.

Per state law, when year-end revenues exceed projections and create a surplus, the funds must be allocated to certain accounts, a process referred to as the “cascade.”

Among the accounts that will receive funds from the latest surplus are: $12.9 million to the Maine Child Care Affordability Program, which subsidizes the increasing cost of child care; $2 million to a fund for retiree health insurance; and $1 million to the Finance Authority of Maine’s loan insurance reserve.

The rest is split between the budget stabilization fund (often referred to as the “rainy day fund”) and the highway and bridge capital fund, but since the rainy day fund has reached the statutory maximum – $968 million – the remaining $75 million will go to transportation capital.

“The governor’s financial priority has always been to make sure that the state is on steady fiscal ground, that we are paying our bills and paying them on time, and that we are making important investments in Maine people in a sustainable way,” said Kirsten Figueroa, commissioner of the Department of Financial and Administrative Services. “This surplus continues to meet that priority and demonstrate the governor’s and the Legislature’s responsible fiscal stewardship. With revenues flattening, we will work closely with the Legislature in the coming years to ensure that spending does not exceed available resources and that we continue to remain in the black.”

By law, the state is required to have a balanced budget, but budgets are created using revenue projections that are often adjusted throughout a two-year cycle. When that happens, lawmakers often pass a supplemental budget to account for those adjustments.

During the last legislative session, Mills drafted a supplemental budget that called for using surplus funds to invest in housing and nursing homes.

Some Republicans in the Legislature pushed for additional tax cuts, to no avail.

“Republican calls for tax relief have fallen on deaf ears in the last year, leading to the passage of multiple majority budgets by legislative Democrats,” House Republican leader Billy Bob Faulkingham of Winter Harbor said this spring. “Republicans are hopeful projected excess revenue will allow for the immediate funding of the disaster relief bill funding repairs to working waterfronts and other infrastructure.”

But Mills had made some cuts, including expanding the property tax fairness credit for income-eligible owners, expanding the homestead exemption, which reduces property tax burden, and expanding eligibility for the state’s property tax deferral program.

Mills also has resisted calls from some Democrats to increase ongoing spending and has focused on one-time spending – including rebate checks to residents during the pandemic.