State of Maine Ends 2026 Fiscal Year with $148 Million Surplus

 $115 million will be distributed to the Highway Fund through a process known as the "cascade"

AUGUSTA, Maine - The Mills Administration announced today that the State of Maine has ended the 2026 Fiscal Year with a General Fund surplus of more than $148 million.

According to state law, when year-end revenues exceed projections and result in an unappropriated General Fund surplus, those surplus funds are transferred to other certain accounts - in order of priority through a process known as the "cascade."

After these priority transfers are met, Maine law requires the remaining surplus be divided into an 80/20 percent split between the Budget Stabilization Fund, formerly known as the "Rainy Day Fund," and the Highway and Bridge Capital Fund.

Following priority transfers, this year's cascade allocates $26.2 million to the Budget Stabilization Fund (BSF), returning it to its statutory maximum or 18 percent of the prior year's General Fund revenues, or $1.056 billion.

"Throughout my time in office, my Administration has worked hard with the Legislature to produce responsible state budgets that invest in Maine people and improve our economy while living within our means. For the fifth consecutive year, Maine's government has ended the fiscal year with a surplus, demonstrating that we have budgeted prudently and are on strong fiscal footing," said Governor Janet Mills.

With the BSF at its statutory maximum, the remaining $115.7 million in surplus is allocated to the Highway and Bridge Capital Fund. In addition, the Maine Department of Transportation will receive another $20.26 million from the Highway Fund surplus for a total of nearly $136 million in additional funding. This $136 million will help MaineDOT add back to its Work Plan many of the projects it had to delay earlier this year amid funding challenges.

"Thanks to these year-end transfers, many of the projects MaineDOT initially had to put on hold can get rescheduled, and we look forward to thoughtfully, reasonably, and expeditiously processing them in the weeks ahead," said MaineDOT Commissioner Dale Doughty. "While these will go a long way to fulfilling Maine's much needed capital needs this year, MaineDOT will continue to encourage lawmakers to implement a long-term solution to this perpetual issue in the years ahead."

Over the past eight years, Governor Mills and the Legislature have dedicated more than $1.44 billion in new funding to MaineDOT for its capital program. Despite these investments, inflation and increased project costs have resulted in reduced purchasing power for MaineDOT in implementing the Department's multi-year capital Work Plans. Under these challenges, the Highway Fund has not kept pace, creating recurring funding challenges.

During last year's legislative session, lawmakers proposed a $65 million Highway Fund bond to help address the funding gap and considered legislation that would have increased the share of automobile-related sales tax revenue dedicated to the Highway Fund. The Mills Administration supported both measures, though they did not advance. As a result, MaineDOT earlier this year was forced to delay a series of projects. Now, with the increased funding reallocated from the surplus to the Highway and Bridge Capital Fund, most of these projects will be added back to the Work Plan; exceptions include projects awaiting federal grant determinations and those receiving alternative scopes.

"The State of Maine again has ended the Fiscal Year in the black, and, consistent with State law, has transferred unappropriated funds as directed by the Legislature," said Elaine Clark, Commissioner of the Department of Administrative and Financial Services. "Governor Mills' strong fiscal leadership, along with that of the Legislature, has led to substantial operating reserves that will provide much needed support to our highways and bridges while maintaining a healthy Budget Stabilization Fund for the next administration. The State of Maine continues to be in good fiscal standing."

At the close of fiscal year 2026, the following transfers were made from the General Fund Unappropriated Surplus through the cascade, consistent with State law:

• $1 million to Governor's Contingency Account
• $1 million to FAME Loan Insurance Reserve
• $2.5 million to Reserve for Operating Capital
• $2 million to Retiree Health Insurance
• $26.2 million to Budget Stabilization Fund
• $115.7 million to Highway and Bridge Capital Fund

The FY26/27 supplemental budget takes effect 90 days after legislative adjournment on July 29, 2026. At that time, $291 million from the BSF will be used to fund a series of projects, including one-time affordability checks to over 500,000 Maine people, leaving a healthy BSF balance of more than $764 million.

Under the leadership of Governor Mills, the State continues to remain on strong fiscal footing. Based on its fiscal picture, Moody's has reaffirmed Maine's credit rating of Aa1, their second highest possible rating, while S&P also affirmed its AA rating earlier this year. Fitch Ratings, one of the top international credit rating agencies, just recently reaffirmed Maine's bond credit rating of AA+, the second highest rating that Fitch issues.

For the complete cascade as prescribed in law, please click HERE. 

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