Governor Mills Unveils Balanced Biennial Budget Proposal

Governor proposes balanced approach of investments, spending reductions, and targeted revenue enhancements to balance budget while maintaining core voter-approved programs

Governor Janet Mills today unveiled her Administration's budget proposal for the Fiscal Year 2026-2027 biennium.

The proposal is balanced and makes needed investments to maintain the Governor's core commitments to Maine people such as health care, 55 percent of education, free school meals for all Maine students, and five percent municipal revenue sharing to stabilize property taxes and support municipal services.

For the first time, it also proposes making permanent the Governor's highly successful Free Community College initiative, which has led to record enrollment in the Maine Community College System and created a clear, credentialed pathway into the workforce for more students.

The budget also proposes a combination of programmatic changes within the Department of Health and Human Services to save costs and targeted revenue increases in order to close a budget gap.

"This was a difficult budget to put together. Our economy is strong, but our revenues are leveling-off, and while prior legislatures have made many important and worthwhile investments, we have to consider what we can sustain in this budget cycle," said Governor Janet Mills. "With this proposal, we have taken a balanced approach -- one that includes investments to maintain core programs, like education funding and health care; that raises revenues in a targeted way to benefit public health; and that makes difficult programmatic changes to save money. There are tough decisions to be made in the coming weeks, but I know the Legislature shares my commitment to enact a balanced budget that is good for both Maine people and the fiscal health of our state. I look forward to working with them to achieve that goal."

"In our view, this budget appropriately balances increased costs against flattening revenues by reducing spending on programs and making targeted revenue increases in order to maintain important priorities, like health care, education, and revenue sharing," said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. "Many of these decisions were not easy, and they were not done lightly -- but they are decisions that must be made if we are to maintain these core commitments to Maine people."

"This biennial budget underscores the Governor's commitment to fiscal responsibility and sustaining Maine's critical services," said Sara Gagné-Holmes, Commissioner of the Department of Health and Human Services. "These challenging yet necessary decisions ensure resources are strategically focused on delivering high-quality core services. Through planning and thoughtful allocation of funds, we are addressing immediate needs while safeguarding the long-term sustainability of essential programs and services that so many Maine people depend on."

The budget does not create or fund any new programs, but it provides important additional funding for health care for Maine people through MaineCare (Medicaid), as well as investments in child welfare, children's behavioral health services, nursing facility rate reform, mobile crisis response, and public safety. It also continues the Governor's successful Mobile Home Preservation Fund -- which has helped save the homes of hundreds of Maine people over the past year -- as well as addiction treatment programs in Maine's County Jails.

It rejects broad-based tax changes, such as any increase to Maine's income or sales tax, and it does not draw from Maine's near record high Budget Stabilization Fund, achieved under the Governor.

Instead, it successfully closes the budget gap by utilizing newly recognized revenues from the independent, nonpartisan Revenue Forecasting Committee; making targeted programmatic reductions to certain programs within the Department of Health and Human Services; and raising revenue primarily through a $1.00 increase in Maine's cigarette excise tax and corresponding increases to the excise tax on other tobacco-related products, which has a proven public health benefit.

• More information about investments and programmatic changes at the Department of Health and Human Services can be found here (PDF).
• More information about the proposal regarding the cigarette excise tax can be found here (PDF).

In terms of programs, the budget is a reduction from the $11.67 billion that the recent structural gap report projected would be necessary to fully fund all General Fund appropriation requirements currently in law. However, the budget also funds operational needs, such as utilities and technology upgrades -- needs not considered by the structural gap report. When taken in combination with the investments, programmatic changes, and revenue adjustments, the budget totals approximately $11.63 billion.

The Governor today also presented a $94 million General Fund supplemental to the current Fiscal Year 2025 budget that uses newly recognized revenue from the Revenue Forecasting Committee to fill the FY25 MaineCare gap, along with $5 million to Maine Emergency Management Agency for continued disaster-related storm clean-up, complementing LD 1, the Governor's recently announced storm resilience bill, and funding to combat the forest-damaging spruce budworm in northern Maine, and other small measures.

Highlights of the Governor's biennial budget proposal include:

• Supporting Health Care: Invests $122 million in General Fund per year to stabilize the MaineCare budget and bridge a gap stemming predominantly from significant MaineCare enrollment increases due to federal COVID-era continuous enrollment requirements, as well as from increases in health care costs due to high inflation, increasing patient need, returning to pre-pandemic levels of service utilization, and reimbursement practices that do not control sufficiently for cost growth.
• Maintaining 55 Percent Education Funding: $156.6 million to continue meeting the State's obligation to pay 55 percent of local education costs, which the Governor met for the first-time in Maine's history in 2022. If approved as proposed, the General Fund appropriation for General Purpose Aid (GPA) in FY27 will be $1.509 billion, an ongoing annual increase of more than $411 million over the FY19 cost of $1.098 billion.
• Maintaining 5 Percent Revenue Sharing: $561.2 million for the biennium to maintain 5 percent Municipal Revenue Sharing, continuing to meet the State's obligation to Maine municipalities and mitigating property taxes increases. In fall 2022, Maine cities and towns began receiving the full statutorily required 5 percent each month of State-Municipal Revenue Sharing, up from 2 percent in FY19. In FY19, Municipal Revenue Sharing transferred $74.1 million to cities and towns. The projection for FY27 is $284 million.
• Providing Free School Meals for All Maine Students: $6 million to fully fund universal free meals for students in public schools and for publicly funded students in approved private schools. This program, which the Legislature originally funded with a $27 million appropriation, now costs $64 million a year.
• Making Permanent Free Community College: $7.3 million in FY25 funding to continue providing up to two years of free community college for all students from the high school graduating classes of 2024 and 2025. An additional $25 million in the biennial makes the Governor's Free Community College a permanent initiative, instead of funding it on a one-time basis from budget to budget.
• Supporting Higher Education: $41 million to support a 4 percent increase for Maine's public higher education institutions, including the University of Maine System, the Maine Community College System, and Maine Maritime Academy. The budget also proposes another $10 million for Maine's higher education institutions to cover the costs related to the implementation of Maine's new Paid Family Medical Leave program.
• Stabilizes Fund for Healthy Maine: Transitions nearly $29 million in funding for public health services to the General Fund in recognition of declining Fund for Healthy Maine revenues in FY26-27, as projected by the Revenue Forecast Committee. These services include tobacco prevention and cessation; oral and dental health; obesity prevention; radon impact; child care affordability program; head start; and substance use disorder residential treatment.
• Investing in Behavioral Health: Invests $1.5 million in FY26 and $2.5 million in FY27 to provide funding for final rates for two services responsive to the DOJ settlement: Therapeutic Foster Care and a new service called Therapeutic Intensive Homes.
• Funds Victims' Services: $3 million per year in ongoing funding to address a Federal funding shortfall from the Victims of Crime Act (VOCA). The State funding will support community-based domestic violence and sexual assault services, civil legal representation for victims, government-based victim witness advocates, and housing and supportive services for elder abuse victims.
• Improving Rates for Nursing Facilities: Invests $6.5 million to fully fund Maine's nursing facility rate reform, which will support the direct care workforce, incentivize permanent staff, and promote quality care and positive health outcomes for Maine residents who live in nursing facilities.
• Protecting Residents of Mobile Home Parks: Adds $3 million in one-time funding to continue the Governor's highly successful Mobile Home Preservation fund to support the purchase of mobile home parks by their residents. Since its creation last year, the fund has helped save the homes of hundreds of Maine people.
• Teacher Retirement: $29.5 million for the biennium to fund the increased costs of the unfunded liability in teacher retirement.

The Governor's FY26-27 biennial budget proposal will be available on the Bureau of the Budget websiteby the end of the day.