Gov. Janet Mills proposed an additional $187 million in education funding Wednesday in a revision of the recently approved state budget that also includes allocations to the Medicaid program, environmental protection and the state’s “rainy day” contingency fund.

Combined with a proposed increase in revenue sharing with municipalities, Mills’ budget could relieve pressure on property taxes, a prospect that earned praise from educators and municipal leaders. But some conservatives repeated a call for income tax relief and questioned the need for more spending on schools.

The education spending, if approved by the Legislature, would bump the state’s share of public school funding to 55 percent of essential service costs, a mandate in law that’s never been met since it was approved by voters 17 years ago.

“This budget proposal focuses on improving the lives and livelihoods of Maine people and on strengthening our state for years to come,” Mills said during an online news conference announcing the proposal.

She credited federal support and prudent fiscal management by her administration during the pandemic for the healthy revenue forecast that shows the state will collect $941 million more than expected over the next two years.

“As a result, we can not only fully fund education for the first time in our history, but we can give money back to the taxpayers through revenue sharing, tax fairness credits for property taxpayers, and income tax relief for low-income and middle-class families,” Mills said.

Her proposal addresses what she called “a host of bipartisan priorities” including measures that would provide tax relief and improve health. The proposal also increases state revenue sharing with town and city governments.

“This is welcomed news,” Portland Mayor Kate Snyder said, adding that she did not yet know how much more revenue the city would receive. “It’s great news for the city of Portland and every city and town in Maine.”

Maine Municipal Association President James Gardner  thanked Mills for increasing both education funding and revenue sharing.

“Getting the state’s share of general purpose aid for K-12 education to 55 percent and increasing revenue sharing to municipalities from 3.75 percent to 5 percent solidifies the state-municipal partnership and provides needed help to Maine property taxpayers,” said Gardner, who is also the town manger for Easton.

The proposal also socks another $52 million into the state’s “rainy day” savings account, meant as a backstop for state government when the economy sours. The addition would raise the fund to a record $313 million.

Another $40 million in the proposal is aimed at cleaning up per- and polyfluoroalkyl substances (PFAS) from farm land in Maine. That funding includes $15 million to help farmers impacted by the “forever chemicals,” $15 million to provide safe drinking water, $5 million for environmental testing, and $5 million for managing PFAS-contaminated waste.

“This funding is critical to identify areas in the state with high PFAS concentrations in well water, to provide safe alternative water supplies, and to provide quick solutions to prevent PFAS-contaminated wastes from impacting drinking water supplies,” said Melanie Loyzim, commissioner of the Maine Department of Environmental Protection. “Safe drinking water is a basic human need. We will not leave citizens at risk when we can take action now.”

The package also would put $90 million in federal funds toward the state’s Medicaid stabilization fund, as a contingency. Mills said the budget changes are meant to aid the state’s post COVID-19 pandemic economic recovery and achieve long-term growth for the state’s people, businesses and communities.

In addition, Mills would use $32 million to offset state sales tax revenue that would be lost if menthol cigarettes, flavored cigars and vaping products were banned for sale in Maine, as proposed by a bill moving through the Legislature. The federal FDA also is signaling it likely will place a federal ban on menthol cigarettes in the months ahead.

The governor’s proposal essentially updates the $8.3 billion, two-year state budget that was passed in March by majority Democrats in the Legislature. The update would increase spending over the two-year budget cycle to $8.77 billion. The proposal also complements her recently announced plan for using $1.13 billion in federal American Rescue Plan Act funding heading to Maine. In addition, the spending enhances a $140 million borrowing plan Mills released last week to support land conservation and road repair and construction.

In March, Mills signed the new two-year budget into law over Republican objections. She said then that an update was already in the works, following a state sales and income tax revenue forecast that was buoyed by large infusions of federal pandemic relief to businesses and individuals in 2020.

Her latest spending package could rocket through the Legislature, which meets next Wednesday, with or without Republican support, as the bill will only need a majority vote to become law. The Legislature’s budget-writing Appropriations and Financial Affairs Committee is set to meet Friday in a work session on the package and is likely to act quickly to set much of the plan into action.

Mills said she intended the bill to be passed as an emergency measure, which would allow it to go into effect immediately upon her signature. However, that would require two-thirds support in both the House and the Senate and minority Republicans could balk at parts of the package.

Mills said emergency passage would be important for the school funding portion of the package because it would allow local school districts to plan their budgets based on the increases. Most school budgets in Maine go to local voters for ratification in June.

Democrats could still pass the measure with majority-only votes, but it would not go into law until 90 days after the Legislature adjourns.

Republicans have asked that significant portions of the surplus revenue be returned to taxpayers, especially those who continued to work through the pandemic. They have suggested a $10,200 state income tax credit for those workers, which would match a tax credit given on unemployment benefits to those who lost their jobs because of restrictions meant to slow the spread of the virus in Maine.

Republicans also have pushed to increase state revenue sharing with municipal governments and to grow property tax exemptions for homeowners.

Mills said she was not fully informed on the Republican proposal, including how much an income tax credit would cost. She also demurred on how much room there was for negotiation on the package, noting it would next move to the Legislature for initial debate.

The proposal drew quick reaction and praise from those it would impact Wednesday.

Gorham Superintendent Heather Perry said the governor’s proposal would be an incredible development for schools, especially as they continue to respond to the COVID-19 pandemic, which has demanded things like smaller class sizes and increased support for families. “Those things cost money and I think she understands that,” Perry said.

“The state’s willingness to prioritize public education in that fashion and to reach that ultimate 55 percent is a monumental thing,” Perry said.

South Portland Superintendent Ken Kunin said he was “thrilled” to see Mills move to 55 percent for the state’s share of public school funding. “While we will not know the impact for South Portland until possible subsidy numbers are released, we believe this represents a historic investment in our students, our communities and our future,” he said.

But Matthew Gagnon, the chief executive officer of the right-leaning Maine Policy Institute, criticized the proposal in a written statement.

“The 55 percent state funding requirement for public education is arbitrary, and while this standard is required by law, throwing money at Maine’s education system has not, and will not, lead to better educational outcomes,” Gagnon said. He also criticized Mills’ inclusion of the $32 million for lost tobacco tax revenue, noting that the bill had not been approved by the Legislature.

Republican leaders in the Legislature said they were reviewing the proposal by Mills, emphasizing it was up to the Legislature to pass the budget into law.

“This is a proposal,” said Senate Minority Leader Jeff Timberlake, R-Turner. Timberlake said Mills had been briefed on their suggestion on an income tax credit and seemed to be ignoring it.

House Minority Leader Kathleen Dillingham, R-Oxford, said Republicans were pleased Mills was proposing increased revenue sharing but wanted to see more tax relief sent directly to Maine residents.

“Every Mainer has been impacted by the pandemic over the last 14 months,” Dillingham said. “Meaningful income and property tax relief is achievable due to the substantial federal relief that is flowing into Maine. The more that can be directed to Maine citizens, the more quickly our economy will recover and add jobs.”

Appropriations Committee Senate Chair Cathy Breen, D-Falmouth, also praised the proposed increased for public education. Breen called the proposal, “a good starting point” for the committee.

“It’s clear that the needs of our state are great,” Breen said. “Yet, we can’t stop planning for the future, which includes putting aside funds for emergencies.”

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