Maine has received the second-highest rating from one of the three international firms that closely track state finances.
Credit ratings directly impact how much it costs a state to repay the debt it incurs by issuing bonds. Earlier this week, Fitch Ratings upgraded Maine one step to a rating of AA+, and said the change reflects "strong budget controls and discipline," good reserves and "sustained improvement" in the state's financial performance during a challenging budget cycle.
Maine currently has just over $1 billion in the reserve account, often referred to as a Rainy Day Fund, that is supposed to help states weather economic downturns. That's the maximum allowed in the fund under state law, which caps the Budget Stabilization Fund at 18% of the General Fund revenues from the prior year.
Maine also finished the fiscal year that ended on June 30 with a surplus of $152.2 million, according to the office of Gov. Janet Mills.
“This significant ratings upgrade from Fitch, a well-respected global credit ratings agency, combined with our healthy reserves, shows the strength of the State’s financial picture,” Mills said in a statement. Mills added that she hoped to continue that progress "despite the needless economic challenges and uncertainty coming from Washington.”
Fitch did note in its analysis, however, that Maine's longer-term prospects for economic growth are below the national average. And one big reason is the labor challenges that come with having the oldest population in the nation.
"Maine's economic growth prospects are below the U.S. state average," reads the state's profile in the Fitch rating. "It has the oldest population in the country, which grew 5.8% from 2010 to 2024 — slightly more than half the U.S. rate of 10.2%. Maine's unemployment rate has historically remained below the national rate, as is the case for other slow-growth, older states. Other labor market indicators have lagged national trends over the past decade. These demographic pressures limit economic growth. Maine's workforce has educational levels in line with U.S. averages, and personal income growth tracks closely to the national pace."
The credit agency Moody's lists Maine as Aa1, which is the agency's second-highest rating, while S&P recently reaffirmed its AA rating for the state.
