
On January 10, Gov. Janet Mills released her proposed budget for the 2026-27 biennium. While she forewarned about the budget needing to be “tight” before its release due to numerous funding shortfalls, the budget she released contained several new taxes and fees, many of which directly increase the cost of living for Mainers.
The budget is quite lengthy, 129 pages, but Gov. Mills did not include any significant budget cuts in it. Instead, she created many new taxes and fees to fill the upcoming budget shortfall. Maine Policy has compiled the most important policies below.
Notable Tax Increases
- Budget Section E: This section increases the tobacco tax, raising the per cigarette rate from 10 cents to 15, and increases it for other tobacco products from 43% to 65%.
- Budget Section F: This section increases the sales tax on cannabis from 10% to 14% but reduces the excise taxes on various cannabis products by varying amounts.
- Budget Section G: This section transitions telecom services, digital, and visual/audio media works into the general sales tax, reducing the tax rate from 6% to 5.5%. However, this section also includes streaming services in the sales tax as well. Gov. Mills has previously proposed creating a digital streaming tax numerous times.
More ‘Targeted’ Revenue Sources
- Budget Section T: This section increases the annual license fee for arborists from $75 to $180
- Budget Section SS: This section establishes a per prescription 70 cents tax on pharmacy providers starting April 1, 2026.
- Budget Section TT: This section establishes a 6% tax on ambulance providers, which would directly fund MaineCare through the Department of Health and Human Services.
- Budget Section WW: This section would allow the Department of Health and Human Services to assess a fee on Maine hospitals based on the number of inpatient beds, and cap the total assessment collection at $1.8 million per year.
- Budget Section NNN: This section would increase the fee for fishing licenses by $7.
- Budget Section VVV: This section would increase the fee for applying for and renewing concealed handgun permits by $15 for residents and $20 for non-residents.
Other Budget Peculiarities
- Budget Section H: This section establishes an income-based phase-out of pension dedications, beginning at $100k for individuals.
- Budget Section Q: This section tells the state controller to transfer about $6.3 million to the General Fund from various sources, most notably $2.3 million from the Property Tax Stabilization Fund and another $3.9 million from the Reimbursement-Homestead Property Tax Exemption Fund. These funds exist to provide relief to Mainers from property taxes, the first being for seniors and the other for long-term Maine residents who have lived in the same location for an extended time.
- Budget Section R: This section wants to increase the job attrition rate for Maine’s judicial and executive branches from 1.6% to 5%.
- Budget Section LLL: This would postpone a conservation fiscal stability program requiring excess funding to the Department of Inland Fisheries and Wildlife from 2026-27 to 2028-29.
- Budget Section ZZZ: This section wants to suspend the upcoming year’s appropriations limit, which is the ceiling of how much money can be appropriated/allocated to the General Fund. This is usually only waived in extraordinary circumstances, and Maine law explicitly says it is not supposed to be done just because we have revenue shortfalls.
These are some of the more notable budget sections regarding spending and taking more money from the general public. Also of note is a section that would change the Governor’s Energy Office into a cabinet-level state Department of Energy. Another notable section gives Maine DHHS more leeway in determining MaineCare’s cost of living adjustments.
While there aren’t as many new spending lines in the budget as there have been before, the Legislature is very likely to tack on its own pet projects as negotiations commence. While many of these new taxes will be unpopular, Gov. Mills and the Legislature would have to dedicate themselves to accurate, significant spending cuts to avoid them at this point, which is something they are unlikely to do.