House Speaker Ryan Fecteau, D-Biddeford, reminds members not to applaud or react during a debate on a budget bill Thursday in the House of Representatives chamber at the Maine State House in Augusta. Joe Phelan/Kennebec Journal

AUGUSTA — Gov. Janet Mills signed a two-year, $11.3 billion budget into law Friday, ensuring the continued operation of state government beyond July 1 and providing the funds to repay hospitals for MaineCare  reimbursements that are being delayed because of a budget shortfall.

The governor also signed a proclamation Friday calling the Legislature back into a special session on Tuesday. Lawmakers officially adjourned after Democrats passed the budget early Friday morning so the funds would become available in 90 days — in time for the start of the next fiscal year.

The maneuver allowed the Democrats to use their majorities in the House of Representatives and Senate to enact the budget without Republican support. Had the Legislature approved the budget with a bipartisan, two-thirds majority, the bill could have gone into effect immediately rather than in 90 days.

“Over the last two months, I repeatedly encouraged Democratic and Republican leadership to work together so we could avoid this unfortunate outcome,” Mills said in a written statement. “However, I have signed this budget bill because it is in the best interest of the people of Maine. It will pay Maine hospitals, nursing homes and other health care providers, protect Maine forests from spruce budworm, and ensure essential government services that Maine people rely on are funded for the biennium.

“During this period of significant uncertainty nationally, our people, businesses, municipalities, and schools must have stability from their state government.”

The budget was enacted in the House, 76-66, before it was sent to the Senate, which voted to narrowly enact the budget in an 18-17 vote. In the House, Rep. Ed Crockett, D-Portland, joined all Republicans in voting against the budget in an initial vote. In the Senate, Sens. Craig Hickman, D-Winthrop, and Stacey Brenner, D-Gorham, joined Republicans in opposition.

Democratic lawmakers argued that passing a baseline budget and avoiding the risk of partisan gridlock would ensure state funds are available July 1 and provide certainty to municipal and school officials as they draft their budgets for the next fiscal year. The budget does not include any of the tax increases or cuts proposed by Mills, they said.

But Republicans accused the majority party of cutting them out of the process, effectively silencing the voices of their constituents. They also criticized the budget bill as not being balanced because it does not include more than $100 million in anticipated MaineCare cost increases in fiscal 2027.

Rep. Drew Gattine, D-Westbrook, said Thursday that municipal officials need to have faith that lawmakers will fully fund public education, municipal revenue sharing and other programs, especially given the uncertainty created by the new Trump administration, whose policies on tariffs and moves to eliminate swaths of the federal workforce are stoking fears of a recession.

“These are unstable and uncertain times, but this bill provides some stability to our communities and to our constituents,” said Gattine, who co-chairs the budget-writing committee.

Rep. Mark Blier, R-Buxton, blasted Democrats for not giving Republicans a chance to pass a bipartisan two-year budget, noting that House Republicans supported the emergency supplemental budget after winning a concession on General Assistance.

Blier, who serves on the budget committee, said they were only given a few hours to read through the 400-page budget bill before voting Thursday, and accused Democrats of supporting a budget that spends more money than it has in revenues. He predicted Democrats would return with another budget change package that increases taxes to make up the difference.

“The money’s got to come from someplace,” Blier said, his voice rising. “And we’re going to find it either through taxing the population and they’re already overtaxed. … We are not the only people suffering from inflation. The people of Maine are suffering from inflation and what do we do? We’re taxing them more.”

The move to pass a majority budget comes after a partisan impasse over the smaller, supplemental budget to close a shortfall in the current fiscal year. That impasse raised fears of a possible state government shutdown in July if lawmakers fail to reach a bipartisan compromise on a new two-budget plan in the coming weeks.

A budget passed later in the session would need the support of both parties to qualify as an emergency bill and take effect in time for the start of the next fiscal year July 1.

A budget passed without two-thirds support in both chambers would mean funding doesn’t become available until 90 days after adjournment. That means Democrats had until the end of the month to pass a continuing services, or baseline, budget. They then adjourned and will come back in a special session to finish their work, a maneuver they’ve used in the prior two budgets.

Democrats say their baseline budget for the next two years is intended to “keep the lights on,” while lawmakers work toward a bipartisan Part II budget, which would contain new spending and other policy changes. They say the budget doesn’t include any of the tax increases originally proposed by Mills to preserve existing programs, including free community college, free school lunches, 55% funding for public education and maintaining 5% of revenue sharing.

The budget approved Thursday also includes the $121 million supplemental budget, which is needed to balance the current budget through June 30. Most of that spending — $118 million — is being used to cover a deficit in the state’s Medicaid program, known as MaineCare, and $2 million is devoted to protect Maine’s forests from spruce budworms.

Still, failure to pass an emergency supplemental budget with Republican support has put health care providers, particularly in rural areas, in a tough spot financially, according to officials. The state has already begun curtailing payments to MaineCare providers because of the funding gap, and it appeared Friday that the curtailments would remain in place through June 20.

“We are very concerned that this temporary pain could produce permanent damage,” said Jeff Austin, vice president of government affairs and communications for the Maine Hospital Association, in an email. “There are a number of hospitals that are not in a position to absorb this cut in payment. Hospitals are doing their part to treat patients. The Legislature needs to do its job.”

Mills also advised lawmakers Friday that they still have much work left to do and said they shouldn’t allow partisan tensions to get in the way.

“This has already delayed needed payments to our health care providers,” she said. “I will continue to strongly advocate for compromise, bipartisanship, and consensus among Democrats and Republicans during forthcoming budget negotiations.”

2027 MAINECARE INCREASES NOT INCLUDED

According to the state budget office, the budget includes $11.32 billion in spending and leaves $129 million in revenue for a “Part II” budget. But the spending plan does not include over $100 million in anticipated MaineCare cost increases for fiscal 2027, including reimbursements for health care providers.

The Department of Administrative and Financial Services “understands the additional funding needed for FY27 would be addressed in a future appropriations bill,” department spokesperson Sharon Huntley said.

Senate Minority Leader Trey Stewart, R-Presque Isle, accused Democrats of making a power grab and leaving several programs unfunded in 2027.

“Don’t say everything is fine and this is satisfactory to the average person who is out there. It’s not,” Stewart said. “We’re leaving a lot of work on the table here. We’re leaving a lot of programs on the table here, making people think they’re safe and they’re not.”

Sen. Peggy Rotundo, D-Lewiston, said the budget includes $1.3 billion each year for MaineCare, and that lawmakers will take up funding shortfalls and major policy proposals in the Part II budget, which could include changes to the baseline budget advanced by Democrats.

“We will grapple with reductions in federal funding, flattening state revenues and health care costs,” said Rotundo, who co-chairs the budget committee. “We will carefully consider how to meet these challenges and it is my hope we will do so in a way that makes our constituents proud and allays any concerns that our budget is out of control due to runaway spending.”

The Democrats announced that they would pass a majority budget last week after Senate Republicans blocked passage of the supplemental budget despite Democratic concessions to place limits on using General Assistance for housing,  add cost-of-living increases for direct care workers, and launch a third-party audit of the MaineCare program to look for waste, fraud and abuse, among other things.

GA LIMITS NOT INCLUDED

General Assistance limits are not included in the budget, but it does include the 1.95% COLA for direct care workers.

Senate Republicans also wanted to institute work requirements and freeze enrollment for able-bodied MaineCare recipients, but Democrats opposed those proposals, citing a lack of public hearings.

Senate Republicans blocked the supplemental budget even though it was endorsed unanimously by the Appropriations and Financial Affairs Committee, which is made up of eight Democrats and five Republicans. But Rep. Ken Fredette, R-Newport, wasn’t at the meeting and later raised an objection, which led to widespread Republican opposition.

House Republicans offered 17 floor amendments, seeking to place restrictions on who receives free community college tuition, requiring state workers to pay into the new paid family and medical leave program, defunding abortion services through MaineCare, blocking funding for offshore wind, limiting General Assistance to U.S. citizens and limiting housing assistance to three months in a two year period.

Rep. Laurel Libby, R-Auburn, offered 10 amendments, including efforts to eliminate the state income tax, the paid family and medical leave program and state renewable energy goals, among others. Libby, however, has been unable to speak or vote on the House floor after being censured for a social media post about a transgender high school athlete.

Libby was able to announce her amendments, but not speak to them. Under House rules, Libby could regain that ability by apologizing, but she has refused to do so.

All of the amendments were defeated by Democrats in party-line votes.

Staff writer Rachel Ohm contributed to this report.