AUGUSTA — The state of Maine ended the fiscal year on June 30 with a $110.9 million surplus, the LePage administration announced Wednesday, and part of that money will be funneled into funds to stabilize the state budget and reduce the income tax rate.
The administration will allocate $36.8 million to the Budget Stabilization Fund while putting another $9.4 million into a fund that’s aimed at reducing the state’s overall income tax rate.
The Budget Stabilization Fund was created in 2003. It replaced the Rainy Day Fund, which was created by the Legislature in 1985 to prepay outstanding general fund bonds and to support major construction projects.
The stabilization fund is a reserve balance that can be drawn on when the economy declines or other factors cause revenues to fall short of projections, imperiling the state’s budget.
The fund to reduce the state’s income tax rate was established as part of the state’s previous budget process at LePage’s request. LePage has had the longstanding goal of eliminating the state’s income tax and has made steady progress toward reducing it, lowering the state’s top rate from 8.5 percent to 7.15 percent.
The surplus will also provide $350,000 for the governor’s contingency account, while $57.1 million will go towards the state budget for 2018 that was recently passed by the Legislature.
“It is vital for the State of Maine to continue growing the balance of our Budget Stabilization Fund,” LePage said in a prepared statement. “The Maine Legislature has historically chosen to spend 99 percent of all General Fund revenue received by the State. It is encouraging to see that my calls for fiscal responsibility are beginning to resonate with members of the legislature.”
Under the law, the fund could hold as much as 18 percent of all general fund revenues, or over $617 million based on current figures.
Correction: This story was updated at 8:59 a.m., July 27, 2017, to reflect that the state’s top income tax rate has fallen from 8.5 percent to 7.15 percent during the administration of Gov. LePage.
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