Under Democrats and Governor Janet Mills, the Maine State General Fund budget has seen a significant increase, rising by approximately 61% to 65% compared to the final budget of her predecessor, Paul LePage.

Budget Growth Comparison (General Fund)

The budget is typically managed in biennial cycles. Here is how the General Fund spending has evolved:

Biennium	Total Spending	Notes
2018–2019	$7.22 Billion	Final budget under Gov. Paul LePage
2020–2021	$7.83 Billion	First Mills biennium
2022–2023	$8.69 Billion	Increased education & healthcare spending
2024–2025	$10.47 Billion	Included significant pandemic-era adjustments
2026–2027	$11.93 Billion	Proposed/Enacted (includes 2026 supplemental)

Maine has transitioned from a relatively affordable “hidden gem” to one of the least affordable states in the country relative to local paychecks.

Affordability Ranking: Maine currently ranks as the 3rd least affordable state in the U.S. for housing. About 82.7% of Maine households cannot afford the median price of a new home, placing it just behind Hawaii (83%) and New Hampshire (83.4%).

Cost of Living Index: Maine’s overall cost of living is now 12% higher than the national average.

Regional Comparison: Compared to the rest of the U.S., Maine residents pay significantly more for basics:

Housing: 15% higher than the U.S. average.

Utilities: 12% higher than the U.S. average.

Healthcare: 9% higher than the U.S. average.

Cost of Living in Maine 2026 | Salary.com

New Data Show Housing Affordability Concerns Across the U.S. | NAHB

The average electricity bill is up 77% since 2019.

Primary Sources for Rate Data

EnergyBot & Electric Choice (March 2026): Current market data lists Maine’s average residential rate at approximately 30.73 ¢/kWh, which is 76% higher than the national average.

Central Maine Power (CMP) 10-Year History: CMP’s official rate charts (updated through late 2025/early 2026) show that while different rate classes vary, “Standard Offer” supply rates alone increased by roughly 78% between 2013 and 2022.

Maine Department of Energy Resources: State records as of January 1, 2026, show that the “All-In” residential rate (the total of all bill components) for CMP and Versant has climbed 42–52% just since 2020.

Legislative efforts in 2025 and 2026 have fundamentally shifted Maine’s approach to “Home Rule,” moving toward state-mandated density that mirrors Massachusetts’ Chapter 40B and MBTA Communities Act.

The goal of these “density mandates” is to force new housing production by stripping local towns of the ability to block multi-unit developments.

1. The Preemption of Local Zoning (LD 2003 & LD 1829)

State laws now set a “floor” for density that municipalities cannot go below. By July 1, 2026, most Maine towns must comply with these key mandates:

• Abolishing Single-Family-Only Zones: Towns are now prohibited from enacting ordinances that limit a lot to only one housing unit. If a lot allows residential use, it must generally allow at least two units (a duplex) or an Accessory Dwelling Unit (ADU).
  
• “Designated Growth Areas”: In areas identified for growth (usually near town centers or with sewer/water), the mandate jumps to at least 4 units per lot.
  
• Affordability Bonuses: If a developer designates a project as “affordable,” the state mandates a 2.5x density bonus. For example, if a local zone allowed 4 units, a developer can now build 10 units on that same plot, provided 51% are rent-restricted.
  

2. The End of “Growth Caps”

One of the most controversial shifts is the state’s move to ban or severely limit “Rate of Growth” ordinances.

• In the past, towns like Scarborough, Westbrook, and Brunswick used these caps to limit the number of building permits issued per year to ensure schools and roads weren’t overwhelmed.
  
• New Mandate: New legislation (LD 1829) prohibits municipalities from using growth caps in “designated growth areas.” Towns are effectively forced to allow as much development as the market demands, regardless of their preferred “small town” pace.

3. Height and Parking Mandates

To make high-density projects viable, the state has also stripped towns of their ability to require excessive parking or strict height limits for affordable projects:

• Parking: Municipalities cannot require more than two parking spaces for every three units in affordable developments.
• Height: Affordable housing projects are now legally allowed to exceed local height restrictions by one story or 14 feet (up to a 55-foot cap).

Why this feels like “Massachusetts”

For decades, Massachusetts has used Chapter 40B to allow developers to bypass local zoning if a town hasn’t met its 10% affordable housing quota. Maine is adopting a version of this by:

Transit-Oriented Development: While Maine doesn’t have the “T,” legislators are increasingly tying state funding to a town’s willingness to allow high-density housing near “village centers” or transit stops.

Centralizing Authority: Shifting power from local Planning Boards to state-level standards.

Infrastructure Strain: Many Maine towns (like Gorham and Windham) are protesting that they don’t have the Massachusetts-style tax base or public transit to support the sudden influx of 4-unit buildings on suburban lots.

Even after the democrats spending spree, the state has maintained its Budget Stabilization Fund at its statutory maximum of over $1.03 billion – with your taxes. However, the 2026 supplemental budget proposes tapping roughly $300M of this for one-time “Affordability Payments” (aka Handouts) and emergency housing construction.

The Maine Budget Stabilization Fund (BSF), commonly called the “Rainy Day Fund,” is a state-managed savings account designed to act as a financial buffer. Its primary mandate is to ensure the state can meet its existing financial commitments without raising taxes or cutting essential services during an economic recession.

1. The Statutory Mandate

By law (Title 5, §1532), the fund has a very specific set of rules governing how much can be saved and when it can be touched:

• The 18% Cap: The fund is legally capped at 18% of the previous year’s total General Fund revenue. As of late 2025 and early 2026, the fund reached this “statutory maximum,” sitting at approximately $1.03 billion.
  
• The “Cascade” Rule: When the state ends a fiscal year with a surplus, the money follows a “cascade” (a priority list). The Rainy Day Fund is a top priority; once it is full (hits that 18% cap), any leftover surplus is redirected to other areas, such as the Highway and Bridge Capital Fund.
  
• Withdrawal Restrictions: State law dictates that the fund may be expended “only to offset a General Fund revenue shortfall,” with few exceptions. This means if the state collects less tax than it projected, it can pull from the fund to fill the hole.
  

2. The Purpose: Stability and Credit

Beyond just “saving for a bad year,” the fund serves several strategic purposes:

• Protecting Core Services: During a downturn, revenue from income and sales taxes drops. The fund allows the state to continue funding schools (the 55% mandate), MaineCare, and law enforcement without having to pass emergency tax hikes in the middle of a crisis.
  
• Bond Ratings: Credit agencies like Moody’s and S&P look at the size of the Rainy Day Fund to determine Maine’s creditworthiness. A “maxed out” fund helps Maine secure lower interest rates when it borrows money for long-term projects like roads and bridges.
  
• Emergency Exceptions: While primarily for revenue shortfalls, the Governor has limited authority to use small portions for specific emergencies, such as:
  • Death Benefits for fallen first responders.
  • Emergency food assistance for non-profits (up to $400,000) during a declared state of emergency.

Taxes and Fees Going Up

Several new tax burdens have either recently taken effect or are scheduled to begin in 2026:

Cigarette and Tobacco Tax: * As of early 2026, the tax on a pack of cigarettes increased by $1.50, bringing the total state tax to $3.50 per pack.

Paid Family and Medical Leave (PFML) Payroll Tax: * Rate: A 1.0% payroll tax (split between employers and employees).

Status: Contributions began on January 1, 2025. For many workers, this is a new line item on their paychecks to fund a state-run benefit system that begins paying out in May 2026.

Income Tax Bracket Adjustments (LD 229): * The Change: Starting in 2026, Maine has moved from a three-bracket system to a more complex six-bracket system.

The “Top” Rate: A new top marginal rate of 8.2% has been established for individuals earning over $500,000, up from the previous top rate of 7.15%. While this targets high earners, middle-income brackets were also adjusted to capture more revenue as wages rise with inflation.

“Mansion Tax” (Real Estate Transfer Tax): * Properties sold for over $1 million now face a higher transfer tax rate. The rate increased from $2.20 per $500 of value to $6.00 per $500 for the portion of the sale price exceeding $1 million.

Digital Products Tax: * Maine expanded its 5.5% sales tax to include digital streaming services (Netflix, Hulu, Spotify) and digital downloads, which were previously untaxed.