A General Fund structural gap of $636.7 million is projected for the fiscal 2026-2027 biennium

A General Fund structural gap of $636.7 million is projected for the fiscal 2026-2027 biennium, based on a recent analysis of expected revenues and expenditures by the Department of Administrative and Financial Services. The analysis also projects a structural gap of $312.5 million in the Highway Fund.

The report cautions that its projection “should not be considered an accurate reflection of an actual budget shortfall facing State government.”

Governor Janet Mills in January will be proposing a budget for the 2026-2027 biennium and is likely to propose various actions that will significantly lower the projected deficit. Also, the Consensus Economic Forecasting Commission is likely to revise its expectations for the next several years, which will have a bearing on revenue and expenditure forecasts.

Meanwhile, proponents of higher revenues and more spending are once again shining a spotlight on what they claim is a need to increase taxes to finance growing expenditures of programs administered by the Department of Health and Human Services as well as the growth of State support of local PK-12 education spending.

“The sustainable solution to this deficit must come from raising revenues,” asserts one group that blames the “LePage-era” tax cuts for lowering State revenues by around $900 million a year.  The group suggests tax increases “on the highest-earning Mainers and larger corporations” could raise $275 million a year and erase much of the structural deficit in the General Fund.

Governor Mills to date has successfully resisted tax increases (notwithstanding the new Paid Family and Medical Leave program “contributions” that take effect January 2025).

For more information, please visit www.maine.gov/budget.