‘We have been tested,’ Mills tells lawmakers in budget address

AUGUSTA — In a speech that touched on Babe Ruth and Hank Aaron, “The Lord of the Rings” and the recently landed Mars rover, Gov. Janet Mills encouraged lawmakers and everyday Mainers to continue to persevere as the state continues its recovery from the global COVID-19 pandemic.

Gov. Janet Mills gives her prerecorded speech on the state of the state’s budget. Still image from video

“We, like the rest of the nation, were dealt a bad hand last year,” Mills said in the prerecorded video that was aired on Maine Public at 7 p.m. Tuesday. “But we are pushing through. We will get to the other side. We will not only survive, we will rise a better, greater state for all that we have endured and all that we have learned, all whom we have saved.”

Mills referenced Aaron in calling Maine’s people the state’s most valuable player for the many sacrifices they’ve made and the determination, cooperation and perseverance they’ve exhibited for nearly a year now.

The speech came on the same day when she ordered flags lowered to honor the 660 Mainers who lost their lives to the virus since the pandemic hit the state last March.

Billed as a “state of the budget address,” Mills’ message included key priorities for her administration’s proposed $8.4 billion, two-year budget now before the Legislature. The budget continues her administration’s focus on healthcare, education and the economy, she said.

“Those priorities were strongly reflected in our first budget, which began to rebuild our public health infrastructure, protected public safety, funded voter-approved Medicaid expansion that now provides health care to more than 70,000; invested in public schools and raised the minimum teacher salary,” Mills said. “This pandemic has not changed those priorities but, rather, only underscored their importance and the importance of our investments in them. Now is the time to maintain those investments.”

The spending package, which has been the subject of ongoing public hearings before the Legislature’s Appropriations and Financial Affairs Committee, does not increase taxes and adds savings to the state’s “rainy day” fund.

Mills detailed some key provisions, including:
• $3 million for the Health and Environmental Testing Lab, the Health Inspection Program, the Maine Immunization Program, and the Public Health Emergency Preparedness Program
• $5 million for COVID-19 testing, vaccines, and support services for people in quarantine
• $45 million in additional funds for K-12 public education
• $6 million to fund services for adults with developmental disabilities
• $25 million for the state’s Medicaid Stabilization Fund
• $45 million for MaineCare rate increases for nursing facilities, residential facilities for children and older Mainers, services for adults with intellectual and developmental disabilities, and other providers
• $7.5 million for mental health and substance use disorder, including community mental health and $2 million an initiative meant to dispatch mobile response teams to communities with high rates of drug overdoses
• $82 million in tax relief for small Maine businesses that received Paycheck Protection Program loans

“In all, my budget proposals do their best to hold spending steady and preserve public health and education during the pandemic,” Mills said. She said she has heard the calls from those who feel state government should be spending more to help the recovery and from those calling for “sweeping” cuts to state spending.

“I agree that state government cannot be all things to all people all the time. And that it cannot solve all our problems or address the needs of all people,” Mills said. “But history has shown that we cannot cut our way to prosperity. During emergencies such as this, people depend on us to protect children, to secure health care, to safeguard educational and career opportunities, and to protect the most vulnerable of our citizens.”

Lawmakers are constitutionally obligated to approve a balanced budget by the end of the state’s current fiscal year on June. 30.

Since the pandemic hit Maine last March, state tax collections have generally outperformed official revenue forecasts, but Mills also has taken some austerity measures, including curtailing state spending by 10 percent across the board last September.

Mills detailed some of the state’s economic highlights as well.

“Building supplies, consumer sales, auto and business operating sales, retail sales are all up,” Mills said.

“Home sales reached record highs in 2020 as people realized that Maine is one of the safest states in the nation. They know that we have a strong public health focus – with some of the best COVID-19 statistics in the nation – as well as the lowest violent crime rate, one of the lowest property crime rates, low prison rates, unmatched natural resources, and a quality of life that is the envy of many.”

She highlighted the state’s hot real estate market noting that December alone saw housing sales increase by 31.5 percent while the median sale price of a home in Maine also increased by more than 15 percent since the prior year. “One in three home sales went to out-of-state buyers,” Mills said.

She noted 4.6 percent growth in construction jobs during the pandemic based on data from the Associated General Contractors of America and highlighted CNN’s Business Back to Normal Index, which ranks Maine the highest of all the New England states in returning to pre-pandemic economic activity.

But Mills has been in the political cross-hairs of her Republican rivals over a tax proposal that does not fully conform with federal tax policy on Payroll Protection Program loans. Congress, in late December, made the loans exempt from federal income taxes, but Mills’ proposal only exempts the first $1 million of the loans from state income taxes. Businesses that received less than that would have the full amount exempted and businesses that lost money because of COVID-19 also would be exempt from taxation on the loans.

It’s a threshold amount that covers most of Maine’s small businesses, but the difference has drawn criticism from some business groups, while advocates for poor Mainers also have challenged the decision to give profitable businesses a double tax benefit.

Advocates for the poor Tuesday offered support for Mills and her budget proposal. Mike Tipping, a senior strategist for the left-leaning Maine People’s Alliance said she was right to focus on healthcare, education and the economy.

“Maine has underfunded public schools by $2.5 billion over the past 10 years,” Tipping said in a prepared statement. “One in 12 Mainers is going without health coverage. Maine workers and small business owners are facing massive inequality, a difficult recovery and an uncertain future. The Legislature must act by passing a budget that more fairly taxes the wealthy, builds back our communities and meets the gravity of this moment.”

Senate Minority Leader Jeff Timberlake, R-Turner, appreciated Mills’ references to great sports stars like Ruth and Aaron and the focus on teamwork, but said that Mills is not fully engaging the Legislature to be part of the team.

“I didn’t hear much talking about how the governor and the Legislature were going to communicate moving forward,” Timberlake said. “I think it’s very important that we all work together.”

He also said that while Mills points out her tax conformity proposal to not tax PPP loans less than $1 million would aid 99 percent of the small businesses that took loans, there are more than 251 businesses in the remaining 1 percent that face state taxes on loan amounts over $1 million and those businesses employ some 43,000 workers.

Timberlake also said he hoped that government spending that’s focused on recovering from the pandemic is just that and not longstanding wish lists unrelated to the pandemic. “I hope that our counterparts on the other side of the aisle will agree not to pass pieces of legislation that will increase spending for wants and not for needs,” he said. “I think we should only be increasing spending on the things that we need, I think that’s of the utmost importance.”

Mills also detailed her plans for aiding the state’s economic recovery with a $25 million workforce development bond proposal she’s dubbed, “Back to Work.” The funding would go toward new equipment for the state’s career and technical education centers and community colleges.

“There are good-paying jobs in the trades, in electrical or plumbing work, in construction and manufacturing, in health care and life sciences and in clean energy that are going unfilled,” Mills said. “We have to connect the workforce with those jobs and make an investment in new jobs at the same time.”

She also said she has set a goal of doubling the state’s clean energy jobs over the next decade and her administration will start the Maine Career Exploration Program, a key recommendation of the 10-year economic recovery plan developed by the Economic Recovery Committee that Mills convened at the onset of the pandemic last March. That program, however, will tap into funds from the controversial New England Clean Energy Connect power-line project that will be the subject of statewide referendum in November.

Mills said her administration also was focused on increasing access to affordable, high quality child care and would continue its efforts to expand affordable broadband access throughout the state including an additional $30 million bond proposal. She detailed other proposals to help bolster the state’s heritage industries in fishing, forest products and agriculture.

Mills said she had received hundreds, “maybe thousands” of handwritten letters from Mainers during the pandemic. She said one woman writes regularly and mentioned recently watching a scene from the “Lord of the Rings” with her children. The woman details the scene where Frodo tells the wizard Gandalf that he wishes the powerful ring had never come to him.

“And Gandalf responds,” Mills said, quoting from the movie, “‘So do all who live to see such times; but that is not for them to decide. All we have to decide is what to do with the time that is given to us.'”

“None of us wished to see the times we have seen these last twelve months,” Mills said, “but that is not for us to decide. All that we can do is decide what to do with the time that is given to us. And that’s what Maine people have done.”

She also noted the landing of NASA’s Perseverance rover on Mars last week, mentioning the heat shield materials on the entry vehicle that were made in Biddeford.

“For now, Perseverance has put Maine on the map,” Mills said. “For now, perseverance is also our prerequisite for the future, our password to success, our passport for getting our state back on track.”