One of the three international firms that closely monitor state finances has given Maine the second-highest rating.
The cost of a state issuing bonds to pay back its debt is directly impacted by credit ratings. Fitch Ratings upgraded Maine to an AA+ rating earlier this week, citing “sustained improvement” in the state’s financial performance amid a difficult budget cycle, “strong budget controls and discipline,” and adequate reserves.
Currently, Maine has slightly over $1 billion in the Rainy Day Fund, a reserve account designed to assist governments in surviving economic downturns. According to state legislation, which limits the Budget Stabilization Fund to 18% of the General Fund’s previous year’s income, that is the highest amount that can be in the fund.
Additionally, the office of Governor Janet Mills said that Maine had a $152.2 million surplus at the end of the fiscal year that concluded on June 30.
Together with our robust reserves, this notable ratings improvement from the reputable international credit rating company Fitch demonstrates the soundness of the State’s financial situation, Mills said in a statement. “Despite the needless economic challenges and uncertainty coming from Washington,” Mills continued, she intended to maintain that success.
However, Fitch did point out in its study that Maine’s longer-term economic growth prospects are not as strong as the national average. And having the oldest population in the country presents labor issues, which is a major factor.
According to the Fitch rating, “Maine’s economic growth prospects are below the U.S. state average,” the state profile states. Its population, which is the oldest in the nation, increased by 5.8% between 2010 and 2024—just over half of the 10.2% growth rate in the United States. Like other older, slow-growing states, Maine’s unemployment rate has generally stayed below the national average. Over the past ten years, other labor market indicators have not kept pace with national trends. Economic growth is constrained by these demographic forces. Personal income growth in Maine roughly follows the national average, while the workforce’s educational attainment is comparable to the national average.
Maine has the second-highest rating of any credit agency, Aa1, according to Moody’s, while S&P recently maintained its AA rating for the state.
