Maine’s sluggish growth in personal income during the first quarter of the year may largely reflect Gov. Paul LePage’s refusal to expand Medicaid coverage in the state under the Affordable Care Act.

The federal Bureau of Economic Analysis said Tuesday that Maine’s personal income grew just 0.5 percent during the first three months of the year, below the 0.8 percent average increase nationally. Maine’s growth rate in personal income was 39th nationally and last among the six New England states.

The decision to not expand Medicaid means Maine is forgoing the full federal reimbursement for the cost of greater health care coverage, estimated at about $300 million for the state this year. And that, in turn shows up in the bureau’s personal income calculations because personal income includes not only earnings, dividends and interest, but “transfer receipts” – the flow of funds from the government in the form of Social Security, Medicare, unemployment and other payments, and funding for Medicaid expansion.

Maine’s decision to forgo the expansion – and federal funding to pay for it in full during the first three years of the ACA – is most likely a major reason the state saw a drop in transfer receipts, said Amanda Rector, Maine’s state economist.

Expanding Medicaid coverage would have reduced the number of Mainers without health insurance, but LePage said the state would not be able to afford the cost once the federal government dropped its full reimbursement for expansion and began reducing federal coverage to 90 percent by 2020.

A cutoff in extended unemployment benefits was another likely factor in the reduction in transfer receipts to Maine, Rector said.

Maine was one of only four states to see transfer receipts decline during the quarter, during a time in which transfer receipts nationally grew by $41.1 billion – about nine times the increase in the final three months of 2013. Of the other three states recording declines, two have rejected Medicaid expansion and one is still considering what to do.

The Bureau of Economic Analysis said the higher transfer receipts nationally reflected a sharp increase of $22.3 billion in Medicaid benefits because of implementation of the ACA. Other factors included a cost-of-living adjustment in Social Security payments and expanded tax credits.

The increase that Maine did see in personal income reflected gains in earnings for those in the construction, non-durable goods manufacturing, retail and finance industries, the bureau figures show. Those gains were partially offset by declining earnings for farmers and those working in manufacturing of durable goods – items expected to last three years or more.

Maine’s overall personal income figures represented a sharp drop from the final three months of 2013, when personal income in the state rose 1.1 percent from the prior three months. The bureau said about half the states posted an acceleration of growth in income during the first quarter of this year, unlike Maine’s slowdown in growth.

Growth in personal income was fastest in Washington state, Vermont and West Virginia. The biggest drops in personal income were recorded in North Dakota, followed by South Dakota, Arkansas and Nebraska.

Regionally, personal income growth in Maine was last among the six New England states. The region was led by Vermont, followed by Connecticut, New Hampshire, Massachusetts and Rhode Island.

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