Budget approved by Democrats won’t go into effect until fall

Democratic state lawmakers flexed their political muscles this week to grow Maine’s biennial budget by about $800 million, but the party-line votes they used to adopt that budget over Republican opposition means that it won’t go into effect until October.

Democrats had hoped to win enough Republican support for the budget to get the two-thirds vote they needed to have it go into effect right away, especially after it received the blessing of the budget-writing committee, including four out of its five Republican members.

House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, invoked a Kenny Rogers song when describing why his party had decided “to fold ’em” on the budget deal. Democrats were asking for their help now, after ignoring them for months, and expected Republicans to be grateful, he said.

“There are other good things in this budget,” Faulkingham told his fellow lawmakers. “But at the end of the day, it felt less like a majority party trying to negotiate and cooperate with us than a majority party that was seeing how little we would accept.”

Republicans in both chambers pointed to things that weren’t in the spending package that should have been if Democrats wanted a bipartisan budget deal, like $3.4 million to fund state veteran homes and things that shouldn’t have been, like the payroll tax that will fund paid family medical leave.

In pushing for bipartisan support, Democrats highlighted investments in areas that both parties care about, like doubling childcare worker stipends to help parents remain in the workforce or increasing annual income tax pension deductions to $35,000 to help retired Mainers make ends meet.

But Senate President Troy Jackson, D-Allagash, left the podium to deliver a floor speech emphasizing that budgets will always be imperfect. There will always be things that lawmakers will wish they could have gotten in a budget that they don’t, he said. That shouldn’t derail a good budget.

“We really worked hard and we went out of our way to make sure it’s a two-thirds budget,” he said in a rare floor speech. “Now, unfortunately, that has broken down and we don’t have a two-thirds budget even though we spent all this extra time to go forward and craft something that would actually hopefully appease everyone.”

After all the speeches had been given, the budget would go on to pass in the House with an 80-58 vote, far short of the supermajority needed to go into effect right away. The Senate would pass it with a 22-9 vote. Gov. Janet Mills has already indicated she would sign the bill, probably on Tuesday.

Lawmakers and state officials were still trying to determine the impact of the delay on Friday, but most believe that all of the necessary day-to-day operations of local, school, and state funding were addressed in the $9.8 billion continuing services budget adopted in March.

Democrats were reluctant to discuss their failure to secure enough votes to approve a bipartisan budget, something they obviously wanted to do, but were eager to cast blame on Republicans if the delay should disrupt or delay critical programs, like $31 million for expansion of rural emergency medical services.

Most Republicans contacted Friday didn’t know the impact of their budget protest, either.

Many of the programs funded by the addendum to the state budget, which covers two years that started on July 1 and relies on an expected revenue surplus, aren’t scheduled to start right away anyway, which means a delay in availability will not hurt, officials say.

For example, eligible employees cannot take part in the paid family leave program included in the $800 million budget addendum until 2026.

Some programs that will be funded by the addendum budget might be able to tap into matching federal funds before October, so long as the approval has been secured, or use purchase orders that will be paid in the fall to start ramping up programs now, officials said.

But the majority budget deal is still new, not even signed by Mills yet, so officials are reluctant to assess the true cost of the delayed implementation until they have the chance to go review every line item and consider every need being served.

The only House Republican to vote for the budget, Rep. Sawin Millett, R-Waterford, said the failure to get two-thirds support could prove to be a setback to some of the Democrats’ higher priorities, such as housing and child care.

“A lot of things can happen in those 90 days,” Millett said.

Millett and other members of the budget-writing committee will return to Augusta next week to hammer out how to spend whatever money is left over after the $800 million budget addendum to bankroll non-budget bills with initial approvals from both the House and Senate.

One of those bills could be a Republican-sponsored plan to fund Maine’s veteran homes.

Here are some of the highlights of the $800 million budget addendum heading to Mills:

PAID FAMILY AND MEDICAL LEAVE

The package includes $25 million in startup funding to launch a statewide paid family and medical leave program. Once launched, the program would be funded by a new 0.7% to 1% payroll tax, split evenly between employers and workers.

The program would be available to nearly all workers in Maine, making them eligible for up to 12 weeks of paid leave for qualifying conditions once it fully goes into effect in 2026. Employees would have to work for a business for at least 120 days before they could take leave and return to their jobs when they came back.

Maine will become the 13th state to implement mandatory paid leave for workers who need time off to care for family members or themselves.

The program, which will require 36 state positions, is expected to cost $18.5 million a year to administer beginning with the 2027 fiscal year. Those costs would be paid by contributions from employers and employees. But the state also would see an additional $2.5 million in payroll costs since it also would have to pay into the program.

CHILD CARE

It includes $60 million that will be used to double an existing $200 wage stipend for childcare workers to $400 to help address workforce shortages in the industry and make childcare subsidies available to more families by increasing income eligibility from 85% of the state’s median household income to 125%. The change would take effect on Jan. 1, 2024.

Parents are struggling to find child care because the number of licensed providers has shrunk by 18.5% over the last decade, from 1,860 in 2013 to 1,516 today, according to state data. Because of chronic workforce shortages, those that remain open have had to decrease the number of children they can accept, or the hours of care each child can receive.

TAXES

The supplemental budget is based on projections that the state will experience record revenue surpluses over the next two years, so it does not include any income tax or sales tax increases. It does include a new payroll tax to pay for the paid family and medical leave program, although that program does not take effect until 2026. The cost will be 0.7% to 1% of each worker’s wages, split evenly between employers and workers.

The budget includes an income tax reduction for retirees earning pension benefits. The provision will initially increase the amount of pension income that’s exempt from state income taxes from $30,000 to $35,000. The tax exemption for retirees will eventually increase to $48,000.

The budget also includes an income tax break for parents by establishing a new Maine Dependent Tax Credit, which would provide a credit of $300 per dependent beginning in fiscal 2025.

HOUSING

The budget will launch the statewide Housing First program, which seeks to provide chronically homeless people with stable housing so they can overcome other challenges like substance use or mental health. The funding would pay for the on-site services to support residents of privately developed apartment buildings.

The budget also includes money to create a pilot program to get emergency financial assistance to students at risk of homelessness.

EMERGENCY MEDICAL SERVICES

The budget includes $31 million for a new grant program to support Maine-based emergency medical service providers. The program will focus the grants on EMS agencies at immediate risk of failing.

The state’s EMS network has long struggled with increasing call volumes, reimbursement rates that don’t cover service costs, and a workforce shortage driven by demanding work and low pay. and leaving their communities without access to adequate emergency medical services.