At a glance:
- Research shows climate change, technological advancements, and demographic shifts will strain state budgets
- Maine policymakers have created commissions and reports to study all three risks, but the State has only developed detailed plans to address climate change
- Leaders in the State should develop reports that analyze emerging risks using multiple measures of economic progress and create strategies to prepare for technological and demographic changes
Climate change, new technologies, and demographic shifts will increase pressure on state budgets, according to the Pew Charitable Trusts. These changes threaten to impact public investments in Maine, widening inequalities and worsening the cost-of-living crisis. They can be understood as fiscal risks: challenges to state budgets and services provided to Maine communities.
Emerging fiscal risks call for long-term planning by state governments. The State of Maine has developed robust plans for navigating climate change, identifying potential economic impacts, developing a strategy to address them, and regularly evaluating progress.
Policymakers should develop similar assessments and plans to navigate technological and demographic shifts. In doing so, they should regularly evaluate how these and other emerging risks will affect the state’s overall fiscal health as well as the wellbeing of Mainers with low and moderate income, tracking broad measures of economic progress such as access to education, employment, health care, housing, and green spaces.
Changes in climate, technology, and demographics affect state budgets
Researchers at Pew anticipate ecological, technological, and demographic pressures will have profound effects on state budgets.
Climate change presents a range of fiscal risks. Sea level rise, wildfires, and floods have the potential to destroy civic infrastructure communities depend upon, including storm and wastewater facilities. Climate change is also likely to affect major Maine industries such as fishing, tourism, and forestry, threatening state revenue and the livelihoods of workers. Climate change disproportionately impacts low-income, older, and rural communities in the state, threatening to widen existing inequalities and increase the need for public investments. This is particularly true for areas without air-conditioning, indoor jobs, or access to community cooling centers that face major health risks as extreme heat days increase in the next decades.
Technological advances also have the potential to destabilize the state budget. Cyberattacks threaten the public and private infrastructure Mainers use every day to manage communications, finances, energy, health, and public safety. Artificial intelligence technologies threaten to displace workers in many industries, and without regulation any gains in productivity are unlikely to be shared with workers.
Demographic shifts also bring economic uncertainty. Maine is the oldest and most rural state in the nation, with older Mainers already struggling to access key services. Current projections show the state will have a shrinking number of people of traditional working age due to lower fertility rates and an aging population. At the same time, there will be a widening demand for workers in the already-understaffed care industry, with an estimated three quarters of all new workers needing to choose a health care profession to meet anticipated demands. To maintain revenue and support the wellbeing of residents of all ages, the state should plan now for age-friendly infrastructure and support migration, worker recruitment and training, and older worker retention programs to meet budgetary and health care needs.
State leaders have taken steps to plan for each of these challenges
Legislators and state officials in Maine have taken steps to assess potential risks to the state economy, as detailed in the Pew report and Maine Center for Economic Policy’s own research. Members of the executive and legislative branches developed organizations, reports, and planning documents to discuss long-term risks to the state economy. These initiatives build on non-governmental projects to study emerging risks, which are outside of the scope of this study.
| Emerging risk | Organizations | Reports | Plans |
|---|---|---|---|
| Climate change | Maine Climate Council, Climate Resilience Partnership, Infrastructure Resilience and Rebuilding Commission | Scientific Assessment of Climate Change and its Effects in Maine, Climate Website, RFC February 2026 Revenue Report | Maine Won't Wait: A Four-year Plan for Climate Action |
| Tech development | Maine Artificial Intelligence Task Force | Maine Artificial Intelligence Task Force Report, RFC May 2025 Revenue Report | N/A |
| Demographic shift | Cabinet on Aging, Consortium for Aging Policy Research and Analysis (CAPRA) | Cabinet on Aging February 2026 Report, Maine State Plan on Aging Needs Assessment | N/A |
| Multi-risk assessment organizations, reports, and plans | Governor's Office of Policy Innovation and the Future, Revenue Forecasting Committee, Consensus Economic Forecasting Commission (CEFC), Maine State Economist Office | ||
The state’s most robust emerging risk studies have been on climate change, providing a detailed action plan and metrics for regularly monitoring progress. The economic assessments in these climate reports emphasize the impacts to industries rather than to the state budget or individual families, however. Future reports would benefit from more detailed discussions of the potential impact of climate change on families with low and moderate income, as well as recommendations for how the state can anticipate and manage the budgetary implications of these impacts over time.
The state’s initial reports on new technologies and shifting demographics offer some limited discussion of economic impacts in the state, as well, and similarly emphasize market impacts. The inaugural Maine Artificial Intelligence Task Force Report focuses largely on the potential market benefits of AI, calling for wider implementation. The Task Force does not fully discuss the potential for AI to widen income inequality, nor does it propose policies that would support more equitable AI implementation.
Reports on demographic pressures in the state are also limited. Work by the Cabinet on Aging largely focuses on social service policies that support quality of life for older Mainers, without delving into how the state can plan for economic shifts and invest in programs that support the wellbeing of all Mainers. This may be outside of the scope of the Council on Aging or Consortium for Aging Policy Research and Analysis (CAPRA), and it may therefore be helpful to develop a task force that tracks, measures, and plans for broad demographic shifts, including such factors as an aging population, labor changes related to AI, and immigration and migration trends, including climate migration.
The state does not yet have a dedicated commission or report that focuses on assessing and preparing for long-term risks to Maine families using broad indicators of economic progress.
Work remains to prepare Maine for future economic challenges
Through long-term planning, Maine policymakers have taken steps to ensure the state is resilient in the face of geopolitical shifts. As a new governor is elected in the coming months, there is an opportunity to build on this work. Based on the Pew report and MECEP’s analysis of existing organizations and reports at the state level, MECEP recommends:
- Building on issue-specific studies of emerging risks to more fully discuss the potential economic effects of these pressures on Mainers with low and moderate incomes
- Developing plans to respond to emerging technological and demographic risks
- Expanding tools for regular analysis of the potential economic risks of multiple emerging trends to individuals and the state economy instead of only in issue-specific or ad-hoc reports
- Analyzing and planning for economic pressures using broad measures of economic progress such as access to education, health care, housing, and jobs
Projections of how individual pressures will affect the budgets of Maine families should be included in the next reports by the Artificial Intelligence Task Force, the Maine Climate Council, the Cabinet on Aging, and any new committees, using broad economic indicators such as access to education, employment, health care, and housing. Likewise, state policymakers should create detailed assessments and action plans to successfully navigate technological and demographic shifts. They should also evaluate how these and other emerging hazards may affect Mainers with low and moderate incomes on a frequent basis.
Maine policymakers are in a unique position to prepare the state for major demographic, environmental, and technological shifts and to inform how these shifts affect the well-being of Maine communities. By developing comprehensive studies and plans using broad indicators of economic progress, state leaders can seize the opportunity to make Maine more prosperous and resilient to future challenges.