Gov. Mills proposes nearly 10% increase in 2-year budget

AUGUSTA — Gov. Janet Mills on Wednesday proposed a nearly 10% increase in state spending over the next two years to extend and expand a range of programs begun during her first four-year term in office.

Mills would use the $900 million in additional spending to continue support for public education, pre-kindergarten programs and free community college tuition, and expand investments in behavioral health, child welfare, and services for older Mainers and people with disabilities, among other priorities.

The 9.6% increase in the size of the budget is based on projected growth in state revenues and would not require tax increases or use of the state’s reserves, or rainy day fund, the Mills administration said.

Mills described the budget as a “stabilizing document” that maintains commitments already made. Continuing to fund 55% of all public school costs, for example, will cost an additional $101 million over the next two years.

“I think people want to see some stability in state government – some dependability,” she told reporters gathered in her Cabinet Room. “It carries through on what we promised before and continue to promise to the people of Maine: education, health care, housing, child care, stability in government and continuing progress for all people of Maine.”

Republican leaders in the House and Senate said Wednesday that they believe some of the roughly $1 billion in projected revenue surpluses should be used to reduce taxes on Mainers. They did not provide specific proposals to roll back any taxes, but indicated that would be debated in committee meetings in the coming months.

Mills’ budget proposal maintains revenue-sharing with municipalities, provides $46 million in funding for a senior property tax relief program enacted last year and $17 million in additional funding to increase the state’s reimbursements to municipalities for the Homestead Exemption.

Additional funding is also proposed for people who cannot afford an attorney to defend themselves in criminal proceedings. Mills proposes an additional $17 million in funding for the Maine Commission on Indigent Legal Services, including $3.6 million to hire 10 new public defenders, adding to the five defenders included in the previous state budget. Another $13.5 million would be used to increase hourly reimbursement rates to assigned attorneys handling more complex cases for indigent defendants.

Money is budgeted for some bills already passed by the Legislature but not funded. Those include free school lunches and increased funding for the senior property tax stabilization program, which was originally expected to cost $315,000 in its first year but is expected to cost $46 million over the next two years, the governor’s staff said.

SUPPORT FOR EDUCATION

The budget includes an additional $101 million to maintain the state’s commitment to paying 55% of public education costs and an additional $58 million to continue providing free lunch to school students. Another $10.5 million in new spending is proposed to expand universal prekindergarten.

The budget also invests in higher education, including $15 million to continue offering up to two years of free community college for high school graduates over the next two years and a $41 million increase in funding for the University of Maine System, Maine Community College System and Maine Maritime Academy.

And a large chunk of the budget, $400 million, would go toward transportation projects that could unlock $1 billion in federal infrastructure dollars.

The current two-year state budget is $9.4 billion. Mills’ new proposal for the two years beginning July 1 totals $10.3 billion and is based on revenue forecasts that predict Maine will take in $10.5 billion in revenue during the next two fiscal years. Forecasters say revenue should increase again to $11.5 billion in the following two years.

The strong revenue forecasts are largely driven by higher-than-expected collections from income taxes, a result of wages rising in a job market favoring workers, as well as increases in sales tax revenues, according to the nonpartisan Revenue Forecasting Committee.

Mills’ budget would not spend all of the projected revenues and leaves about $200 million unallocated over two years. Mills said that’s out of concern about a possible economic downturn, although that unallocated revenue will likely fuel a legislative debate over whether to cut taxes.

“This document will be in the hands of the Legislature, the appropriations committee in particular, and various committees of jurisdiction,” she said. “I’m sure they’ll have a lot to say about it in the coming months and I’m anxious to hear from them.”

Mills formally unveiled the budget in a news conference Wednesday afternoon after meeting with Republican and Democratic leaders in the House and Senate.

GOP LEADERS WANT TAXES CUT

“Clearly, if we’ve got over a billion dollars more in hand than we had just two years ago when we went through this exercise, the people of the state of Maine are taxed too much,” said Senate Minority Leader Trey Stewart, R-Presque Isle. “We’re not going to get into details today around where we’re at as a caucus. In fact, we’re going to let the committee process work itself out.”

House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, said he was pleased to see that the budget contains many of the priorities outlined by Republicans during debate on the $473 million emergency winter energy relief plan, including funding for nursing and group homes. But he also said a tax cut is in order.

“What we’re concerned about is the fact that we have over a billion dollars in budget surplus that’s getting spent without a tax cut,” Faulkingham said.

Senate President Troy Jackson, D-Allagash, said Mills’ proposal was “a good place to start” budget negotiations and largely reflected the priorities of Mainers and Democrats, pointing to investments in schools, health care, property tax relief, hospitals, and services for veterans and seniors.

“Now that the governor has released her proposal, the real work begins,” Jackson said. “Maine people are counting on the Legislature to address critical needs around child care, housing and emergency medical services.”

House Speaker Rachel Talbot Ross, D-Portland, sounded a similar note, saying lawmakers looked forward to reviewing the proposal in detail over the coming weeks.

“House Democrats will remain steadfast in prioritizing investments in affordable housing, quality public education, accessible health care, safeguards for our most vulnerable, equitable access to justice, and an economy that works for both people and small businesses,” she said. “This is the work that we were sent here to do, and we do so with a commitment to improve the lives of all Mainers.”

FUNDING FOR NURSING HOMES, DISABLED

Republicans had called on Mills to provide more funding for nursing homes and to address waiting lists for services for people with disabilities.

To that end, the budget proposal includes $27 million in additional state spending for supporting people with disabilities, bringing the total new state and federal investment to $84 million. Of that, $34 million would aim to eliminate wait times for MaineCare Section 29 services, $3 million in emergency funding for Section 21 services and $42 million for cost-of-living increases for providers.

Another $78 million in additional state funding will be spent on services for aging Mainers, bringing the new total state and federal investment to $169 million. About two-thirds of that – $116 million – will be used to help long-term care facilities, including Maine veteran’s homes, recover from the pandemic.

Mills also is proposing $94 million in additional state funding in behavioral health, bringing the total state and federal investment in mental health and substance use disorder to $237 million.

Democrats could pass a budget without Republican support because they control a majority of seats in both chambers. But a so-called majority budget would not take effect for 90 days, which means it would need to be approved by April to prevent a government shutdown on July 1.

Getting enough Republican buy-in to adopt a budget with the support of two-thirds of the Legislature would allow the budget to take effect immediately. But Republicans in the Senate showed during the debate of Mills’ $473 million emergency heating relief proposal that they’re ready to play hardball on budgetary matters.

Mills and Republican leaders said their goal is to pass a bipartisan spending package.

“We’re interesting in pursuing that – again the devil’s in the details and we look forward to unpacking that down at the appropriations committee,” Stewart said.