Maine’s latest revenue forecast shows the state will bring in roughly $248 million more than expected over the next two years. However, instead of asking how to give this money back to taxpayers, state leaders are already discussing what government spending to prioritize. This framing is backwards. Maine families are the ones who generated this revenue in the first place, yet the conversation in Augusta starts and ends with how the government can claim more of it.
The situation becomes even more frustrating when we remember why this new revenue exists at all. During the 2025 session, Maine enacted a slate of new taxes. These were sold as essential to meeting current revenue needs, but the moment the state discovers hundreds of millions in unexpected surplus, the same leaders who insisted on these new burdens refuse to consider repealing them.
In 2025, Maine passed major increases in the tobacco tax, a new tax on streaming services, and a widened real estate transfer tax, to name a few of the newest tax increases. Collectively, these taxes will raise about $150 million over the coming two years. If lawmakers repealed these three taxes tomorrow, the state would still have about $98 million in unexpected revenue remaining. That is almost $100 million in surplus sitting on top of a Budget Stabilization Fund that is already filled to its statutory maximum of nearly $1 billion.
Instead of rushing to expand spending, lawmakers should look at what meaningful reforms could be achieved. Here are three concrete steps Maine could take immediately.
First, exempt the sale and delivery of residential electricity from the state sales tax. This would only cost the general fund approximately $29 million over a biennium, according to fiscal analysis by the Legislature. While taxes are far from the highest cost on the average ratepayer’s utility bill, another $20 million could be dedicated to targeted relief for low income ratepayers, and both of these policies would at least lighten the load on Mainers electric bills.
Second, create a universal education savings account pilot program. For about $25 million per biennium, Maine could support several thousand low and middle income students with education resources tailored to their needs. This would establish an ESA for approximately 2,300 students, equivalent to approximately $5,200 per pupil per year, compared to about $7,200 per pupil in other states with established ESAs, like Arizona. Meanwhile, this wouldn’t actually subtract from the current funding for Maine schools, and would actually inject new funding into the education system.
Third, establish a housing reform incentive fund. This program would reward municipalities that adopt pro-housing policies, such as zoning modernization, permitting reforms, or flexibility that allows more starter homes and multi-unit housing. About $20 million, combined with a redirection of a small portion of existing revenue sharing, would be enough for towns to expand utilities and infrastructure needed for new development without statewide mandates. Overall, it would incentivize towns to encourage development rather than force more uncomfortable, top-down housing mandates from Augusta onto Maine communities.
The remarkable part is that all of these reforms together would cost less than the expected revenue increase over the next two years, even after removing the new taxes. Maine could repeal the most burdensome new taxes from 2025, reduce electricity costs, expand educational opportunity, and encourage housing development while still finishing the biennium with money left over.
As legislative leaders debate how to spend these newfound funds, Mainers should not lose sight of the basic contradiction at play. If these new taxes were truly necessary to sustain state government, how is it that the state now claims to have hundreds of millions of dollars lying around to be spent on new initiatives? And if the state now has more than enough money to pay its bills, why did it impose these taxes on Mainers in the first place?
Maine has the chance to correct its current course. Rather than letting the government grow to meet every new stream of revenue, lawmakers should give that money back to the people who earned it to address some of Maine’s biggest policy challenges.