In day-to-day life, the phrase “save it for a rainy day,” can mean many things: Maybe it’s what you do with that big tip that you got waiting tables in Old Orchard Beach. Maybe your teenager is saving up as they collect wages working at the car wash or serving ice cream cones all summer. Maybe it’s what you and your family decided to do with your inflation relief checks. Whatever it is, you’ve likely set money aside just in case some emergency or surprise expense comes up down the road. You hope that you never have to use these funds – or that you have enough set aside when you do. Life is full of twists and turns; it’s unpredictable and unyielding. Your car breaks down, or you have to go to the doctor. That’s why we save. To protect ourselves, have some peace of mind and prepare for the worst. At the state level, we do the same thing: We put money aside so that our state will be able to respond to a crisis or a serious situation. We need to be ready for the unknown and the unknowable.

As a member of the Appropriations and Financial Affairs Committee, I always get questions from constituents about the state’s budget. Most recently, you’ve likely heard the news reporting that Maine’s Budget Stabilization Fund, also known as the Rainy Day Fund, has reached an all-time high of nearly $900 million, which reflects an increase of over $400 million. This is great news. Even though – because of a Constitutional requirement – Maine always has a balanced budget and never has a deficit, there are big benefits to having a large Rainy Day Fund. In fact, Maine’s credit rating has remained strong, partially because of our strong Rainy Day Fund, even while 22 states saw their rating downgraded during the pandemic. This speaks to Mainers’ strong work ethic and our faith in fiscal responsibility, as well as the sound budget policies that my colleagues and I worked on in the 130th Legislature. A strong credit rating means that, should Maine need to borrow money, we’d be able to do so with a lower interest rate than if our Rainy Day Fund were low or dry.

In addition to the Rainy Day Fund reaching a historic high, another benefit of the big revenue surplus is that we were able to fully fund the Highway and Bridge Capital Fund, which has not happened in a very long time. We normally have to issue bonds – with interest to be paid by taxpayers – to cover these projects, but now we won’t have to. Looking at the numbers, after the surplus revenue was distributed to cascading accounts, 20 percent of the remainder – or $135.5 million – went to the Highway and Bridge Capital Fund. Another $15 million went to the Education Stabilization Fund, commonly referred to as an Education Rainy Day Fund, which will ensure the state pays the voter-mandated 55 percent of funding for public K-12 education each year. That 55 percent state portion will help alleviate the costs for public education that municipalities and property taxpayers often have to cover.

Some people wonder why the increase over the revenue forecast was so high, and the answer to that question is complex. I’ll run through a few reasons, but this list isn’t exhaustive. For one thing, early in the pandemic Gov. Janet Mills directed a 10 percent curtailment on government spending — that’s no small amount. Another thing that helped Maine keep generating revenue is that tourism did not slow down as much as it could have. For example, tourists visiting Maine spent nearly $8 billion in 2021. Spending on attractions and recreation increased by 184 percent over the figures for 2020. Taken together, this generated more than $1 billion in state tax revenue. Finally, federal stimulus funds and relief brought large amounts of money to the state, too.

Most importantly, because Mainers took steps to keep Maine a relatively safe destination even during the height of the COVID-19 pandemic, people came here, explored our state – and spent their money in our communities. That’s a true testament to our willingness to pull together and get through a hard time. (A rainy day, if you will.) We all benefitted from that collective effort, and we will continue to benefit.

If you ever have any questions about the budget, or state government, please send me an email at Donna.Bailey@legislature.maine.gov or call my legislative office at (207) 287-1515. I’d be happy to hear from you.