AUGUSTA — The LePage administration is proposing to funnel a projected $72.7 million budget surplus into Maine’s rainy day fund, a move that could generate debate with lawmakers about the best uses for the additional money.

On Monday, members of the Maine Revenue Forecasting Committee said they were expecting $72.7 million in additional General Fund revenue through the end of the current two-year budget cycle in June 2017. As a result, Gov. Paul LePage plans to introduce legislation to send all of that money into the state’s Budget Stabilization Fund.

If approved the by Maine Legislature – which isn’t guaranteed given the current political climate in Augusta – the transfer would increase Maine’s rainy day fund from $111 million to at least $183 million by June 30, 2017. That represents roughly 3 percent of the state’s two-year $6.7 billion budget.

The Budget Stabilization Fund, which is frequently referred to as the rainy day fund, is used to cover revenue losses during economic downturns, but has been tapped by politicians to pay for other budget priorities. Credit rating agencies also consider the size of the fund relative to the state budget.

In a statement, LePage said state government could only operate for just over one week on the current fund balance. The Republican governor also took a political jab at lawmakers, who he said have “shown that they cannot be trusted to exercise fiscal restraint,” and said the latest forecast is an opportunity to “restore some semblance of fiscal responsibility to state operations.”

“Bond rating agencies, such as Moody’s and Standard & Poor’s, have warned the State of Maine for years of the consequences should we fail to maintain or increase the balance of our Budget Stabilization Fund,” LePage said. “Our existing balance is insufficient. All too often we wait until the last day of the fiscal year to determine what money the state will put into savings. This is an irresponsible way to run a business and an irresponsible (way) to run a government.”


While there likely will be bipartisan support for setting aside some of the projected surplus, it was unclear Monday how LePage’s proposal to send all $72.7 million to the Budget Stabilization Fund would be received by the Legislature.

“The entire country has seen a remarkable turnaround over the past eight years, and an increased revenue projection is evidence of that turnaround’s effect in Maine,” Senate Minority Leader Justin Alfond, D-Portland, said in a statement. “Our budget must be responsible, and that includes saving for a rainy day. But just like Maine families, the state first has to make sure all its bills are paid and that it’s making investments in the future.”

Republicans and Democrats are already fighting over a “tax conformity” proposal that would align Maine’s tax code with recent changes made at the federal level.

While Republicans want to adopt all of the federal tax credits and deductions, to the tune of $38 million, House Democrats are leading the push for a one-year conformity extension costing $16.8 million. But the House Democratic proposal would also use more than $20 million in the Budget Stabilization Fund to provide additional funding to public schools.

The fight over “tax conformity” has become a full-blown election-year issue.

In recent weeks, LePage and his Republican base in the Legislature have accused Democrats of trying to increase taxes on regular Mainers and business owners. House Democrats, meanwhile, have accused Republicans of being willing to shortchange public schools in order to continue a particular tax break for businesses that they contend has not proved to be effective.


On Monday, LePage accused “a radical group of socialist Democrats” of attempting to raid the rainy day fund. Alfond countered that “it’s no surprise to see that Gov. LePage couldn’t announce a policy proposal without couching it in insults and petty political attacks.”

The Legislature is expected to debate the tax conformity issue again this week, perhaps as early as Tuesday.

A LePage administration official said the governor’s proposal to increase the size of the Budget Stabilization Fund will likely be formally presented to the Legislature “in the coming days.” The legislation would transfer $67.3 million to the fund no later than June 30 of this year followed by a transfer of $5.4 million no later than June 30, 2017.

David Heidrich, spokesman for the Maine Department of Administrative and Financial Services, said an increase in revenue from individual income taxes and other factors led the Revenue Forecasting Committee to project the $72.7 million surplus. The committee is expected to present a formal revenue forecast report on March 1.

“The positive changes made by the revenue forecasting committee primarily recognize strong income tax withholding and high growth in individual estimated payments,” Heidrich said in a statement.


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