The state of Maine may end up having trouble paying off its bills without burdening taxpayers.
In a new report, the nonprofit group Truth in Accounting found that Maine would need $1.6 billion to get out of debt, or $3,200 from each taxpayer.
The TIA’s annual “Financial State of the States” report analyzed 2021 financial records and retirement plans from all 50 states. Maine was ranked No. 29 in terms of fiscal health and received a letter grade of “C.”
According to the TIA, Maine has $11.9 billion in bills and only $10.3 billion available to pay those bills.
Maine improved its fiscal health relative to 2021. It took in an extra $1 billion in tax revenues, and its pension investments increased in value by 26%. But, the city never actually sold those pension investments before they dropped in value in 2022, so those gains were only real on paper.
Even when its pensions were performing well, the city did not set aside enough money to pay the benefits it promised to workers. Maine saved only enough to pay for 20% of future retiree healthcare benefits and 92% of pension benefits.
The TIA projects that future taxpayers will eventually be burdened with the cost of retiree healthcare benefits, unless those benefits are reduced or funding increases.
Maine may be having some struggles to pay off its bills without burdening taxpayers. The nonprofit group Truth in Accounting recently ranked Maine 29th out of the 50 states based on fiscal health. Healthcare for retirees is one of the biggest reasons why, as the state has not saved up nearly enough to pay for all the benefits it has promised workers.
Q: Let’s talk numbers. What’s the debt situation like in Maine, and how could that impact taxpayers?
A; The TIA audited Maine 2021 financial reports and gave the state a letter grade of “C,” because Maine needs an additional $1.6 billion to pay its bills. That means each taxpayer would be on the hook for $3,200.
A big reason is that the city hasn’t been setting aside enough money to pay for retirement benefits. Maine only saved up enough to pay for 20% of the healthcare it promised to its retirees. Unless more funding comes in or the benefits are reduced, future taxpayers are going to bear the burden.
Q: What does the future debt situation look like for Maine?
A: It looked like Maine improved its finances in 2021, because its pension investments increased in value by 25%. But the state never actually sold its pension investments, so those revenue gains were only real on paper. Last year, the pensions began losing value again, and the TIA projects that Maine’s financial situation will keep getting worse.
Q: What does that mean for workers expecting pensions and health care benefits in their retirement?
A: If Maine is going to keep promising these benefits, it’s going to have to change how it’s funding its pensions, or future taxpayers will have to bail out the under-funded retirement promises.