State budget negotiations heat up as legislative session draws to a close

With just over a week to go before the end of the session, leaders of the Legislature’s budget-writing committee are still working through some of the more substantive and contentious pieces of the governor’s supplemental budget proposal.

The final result will help set the stage for the upcoming gubernatorial and legislative campaigns. But Rep. Sawin Millett, R-Waterford, the lead Republican on the committee, said he is optimistic that the group will produce a budget capable of receiving a two-thirds vote of support from the Legislature ahead of the statutory adjournment date of April 20.

“The timelines are tight and much has to be done between now and early next week to get it in a form where we can begin that debate,” Millett said. “There are a few (past) occasions where we have had failures and they often come about when political sides harden their positions. But I don’t sense that this year and I am hopeful.”

As the Appropriations and Financial Affairs Committee continues its budget talks, lawmakers will meet daily starting Monday to work through a pile of outstanding bills, including complex proposals to increase the sovereignty of Maine’s four tribes, reduce barriers to affordable housing and fix deficiencies in the state’s child protection program.

Budget negotiations center on the best use of a projected $1.2 billion surplus that’s the result of an infusion of federal aid and increases in consumer spending. If approved, the state’s two-year budget would grow from $8.5 billion to $8.67 billion.

Gov. Janet Mills, a Democrat, unveiled her first supplemental budget proposal in March and then revised it when the revenue forecast was increased later last month. The centerpiece is Mills’ proposal to return half of the $1.2 billion surplus to eligible taxpayers to help them cope with inflation, which has been at a 40-year high.

But lawmakers’ priorities are also competing for funding. More than 200 bills already approved by lawmakers are awaiting funding approval from the appropriations committee. Those bills, which by some estimates represent nearly $2 billion in new spending, are competing for $20 million left unallocated in Mills’ budget proposal. More funding could be freed up for more of those bills, but it would require cuts elsewhere in the governor’s proposal.

Committee members have been reviewing the budget proposal since it was delivered by Mills. Those negotiations are being conducted in private by the leaders of the Appropriations and Financial Affairs Committee: Co-chairs Sen. Cathy Breen, D-Falmouth, and Rep. Teresa Pierce, D-Falmouth, and the Republican leads, Millet and Sen. Paul Davis Sr. of Sangerville.

When negotiators reach tentative agreement on a specific issue, they hold a public meeting to vote on specific line items. So far, all of those votes have been unanimous. But the committee is just getting into the more contentious portions of the budget.

While expressing confidence that they will produce a budget on time, committee members interviewed last week were careful not to give much information about the ongoing negotiations.

“We’re close, but we’re not there yet,” Davis said in a brief interview at the State House. “That’s the best I can tell you.”

Millett, a state budget veteran who is serving his eighth term, said they are about two-thirds of the way through the budget and that negotiations are being conducted face to face and through text, email and phone calls.

He said the full committee would need to vote on a budget early this week, so a budget bill could be drafted for the full Legislature. The goal, he said, is have that budget bill drafted by April 18, giving lawmakers a day to propose amendments, clearing the way for a vote on April 20.

Chief among the outstanding issues being negotiated is Mills’ proposal to return $680 million of the projected surplus to taxpayers in the form of $850 relief payments and other large ticket items.

Mills has proposed giving the checks to about 800,000 taxpayers who earn less than $75,000 per person or $150,000 for a family.

But Republicans are seeking to send checks to all taxpayers, which would add another 120,000 taxpayers at a cost of roughly $102 million. Some Democrats, on the other hand, want to lower the income threshold to $50,000 for single filers and $100,000 for married joint filers.

Millett said he didn’t want to detail negotiating positions of Republicans or Democrats on various issues. “It’s a very sensitive period,” Millett said.

Rep. Pierce did not directly answer a question about the Democratic negotiations over the relief checks during a brief interview at the State House.

“We want to make sure that what we put together as a final product meets the demanding needs of the state and its residents,” she said. “That’s everything from immediate and direct services to people, and some long-term strategies to address some systemic problems.”

Breen also declined to stake out the Democratic positions on the checks and other issues.

“It’s really hard at this point in the negotiations to put a stake in the ground anywhere without jeopardizing a unanimous committee vote and that’s my highest priority,” Breen said. “I want to get to a deal that we can all can live with, and I can assure you that not everybody is going to get what they want.”

Millett said committee members are also still looking at various higher education proposals, including a $20 million plan to provide up to two years of free community college tuition to high school graduates impacted by the pandemic and an $8 million proposal to prevent tuition hikes in the University of Maine System.

Potential changes to the state’s pension system also are still on the table.

Mills has proposed an additional onetime cost-of-living adjustment of about $14.7 million for retired state workers and teachers. However, the Maine Service Employees Association, a union representing 13,000 workers and retirees who work primarily in the public sector, is pushing for a 2.4 percent cost-of-living increase on the base benefit, which is estimated to cost $147.6 million.

Republicans, meanwhile, are pushing for other pension reforms. They would like to eliminate state income taxes on pensions and retirement income, according to a list of budget priorities released March 30. That proposal would costly roughly $200 million a year, according to Office of Tax Policy.

Breen and Millett said the final portion of the negotiations will deal with the more than 200 bills passed by lawmakers that are awaiting funding on the special appropriations table. Any bill not funded by the end of the session would be considered dead.

Breen said the committee will likely try to identify bills that have strongest, unanimous support among the parties in both chambers and include some of those in the committee’s budget proposal. Then, she said they will divvy up any remaining revenue among the four caucuses – two for each party in each chamber – to fund other bills.

Breen said in lean budget years few if any of those bills get funded. But last year, she said each caucus got $2 million each, for a total of $8 million, which was one of the biggest pools in recent memory.

“Hopefully some of them will be amended into the budget, some of them will get funded off the table and the rest will die and come back next year,” she said.