March 14, 2012

LePage's budget plan includes cuts to Maine welfare, taxes

The proposal would tighten General Assistance guidelines, trim pension levies and eliminate funding for MPBN.

By Susan M. Cover scover@mainetoday.com
State House Bureau

AUGUSTA — A new budget proposed by Gov. Paul LePage to keep the state's two-year, $6 billion spending plan in balance contains a mix of cuts and new spending and proposes tax breaks for retirees and military personnel.

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WHAT'S IN THE BUDGET

Paul LePage's proposed supplemental budget would ...

FUNDING INCREASES:

Cities and towns hit by natural disasters. The state owes municipalities $700,000 in aid for three floods and one tropical storm dating back to 2008.

The Attorney General's Office, which seeks to create a half-time position to help agencies better comply with Freedom of Access Act requests. The appropriation calls for $36,531.

General Assistance in cities and towns. The budget calls for an additional $6.5 million, but also new restrictions, such as not allowing people who get federal cash welfare benefits to qualify, limiting housing assistance to 90 days a year and reducing the reimbursement rate for large cities.

Legal services for the poor. The budget calls for an additional $400,000.

Security at county courthouses, allocating an additional $788,312.

The computer-crimes lab, which has a backlog of 560 cases. The $362,535 in additional funding would pay for three additional investigators.

FUNDING DECREASES:

The Dorothea Dix Psychiatric Center in Bangor, by eliminating 91 positions – 45 of which are now filled – effective May 1. The cut is part of $2.5 million in savings that were in the budget last year. If the jobs are eliminated, about 190 people will remain on staff at the center.

The Maine Public Broadcasting Network. The budget would eliminate all state funding for the network in 2012-13, which now totals $1.7 million.

Maine Maritime Academy, the Maine Community College System and the University of Maine System. The proposed 1 percent cut would total $2.4 million.

The budget also would use money that wasn’t spent as anticipated, and $2.2 million in overpayments to the state retirement system that will be refunded.

Some of the proposals are new, such as increasing funding for court security. Others were rejected last year and are being brought back, such as eliminating state funding for the Maine Public Broadcasting Network.

Republicans and Democrats said LePage's proposal for the period through June 30, 2013, contains controversial proposals including significant changes to General Assistance that is distributed by cities and towns.

In addition to new limits on who would be eligible for aid, LePage is proposing once again to cut the reimbursement level for larger cities like Portland, Lewiston, Bangor and Augusta.

The budget also proposes tax cuts on pensions, a tax cut for active military personnel, and a tax break for wood harvesters and horticulturists. And it proposes to follow through with the elimination of 91 positions at the Dorothea Dix Psychiatric Center in Bangor.

Lawmakers, who were briefed for the first time Tuesday, said they were surprised by the size of the budget – with new spending and tax cuts totaling about $38 million – and by its scope, with policy proposals including the elimination of funding for MPBN and the changes to General Assistance.

Rep. Peggy Rotundo, D-Lewiston, said she had heard that most of the controversial proposals were removed before the budget was released.

"If this is the noncontroversial budget, I'd hate to see what the controversial budget looks like," she said.

Sawin Millett, the state's top finance officer, gave members of the Legislature's Appropriations Committee an overview of the budget proposal. Public hearings on it are set for Monday, Tuesday and Wednesday.

This is one of two major budgets that lawmakers must pass before they finish this session in April. The other budget would cut $100 million from the Department of Health and Human Services in 2012-13.

By proposing an income tax cut on pensions, LePage is keeping a promise he made last summer to reduce taxes on retirees. Because there's no money to pay for the cut now, he is proposing to phase it in over five years beginning in 2013-14.

"The governor wanted to eliminate the pension income tax, but we just couldn't find a way to pay for it," Millett said.

The administration is asking lawmakers to raise the amount of annual pension income that's tax-exempt from $6,000 to $35,000 over five years.

The cuts are projected to cost the state $28 million a year in lost revenue. Millett said the state will receive new revenue by renegotiating a long-term contract for liquor distribution, and that should cover some of the cost.

Democrats expressed concern that they are being asked to approve a budget that will create a deficit in future years. Rotundo called it "fiscally irresponsible" to propose tax cuts without a way to pay for them.

"It's a reduction in revenue in the outlying years that will have a significant impact on (K-12 funding) and higher education," she said.

In addition to the elimination of MPBN funding, Rotundo said, she's troubled by proposed cuts to public campaign funding for legislative and gubernatorial candidates.

Rep. Dennis Keschl, R-Belgrade, said significant policy changes are proposed in the budget and he, too, is worried that the tax cuts aren't covered.

Among the difficult choices are proposed cuts to higher education and MPBN, he said.

 

MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at: scover@mainetoday.com

 

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