AUGUSTA, Maine — Maine would meet a goal of funding 55 percent of essential K-12 education costs for the first time in state history and funnel money into health care initiatives under a spending plan released by Gov. Janet Mills on Wednesday.
The proposal would bring Maine’s next two-year budget to $8.8 billion, buoyed by a raft of federal aid that has bailed states out after they saw dismal revenue projections early in the coronavirus pandemic. The state recently revised revenue projections up by nearly $940 million over that period. The total proposal includes $433 million in appropriations, $315 million in transfers and another $174 million in tax proposals.
This change to the two-year budget passed by Democrats on party lines in March is the last of three major spending proposals released by Mills in the last few weeks. Her Maine Jobs & Recovery Plan would use $1.1 billion in direct aid to the state under the American Rescue Plan, focusing on business aid, economic development and infrastructure. She also wants to borrow $140 million for transportation and conservation projects.
Mills’ new package looks to be the most controversial of the three. While it contains many items with bipartisan support, legislative Republicans are indicating concern about the overall size and the long-term sustainability of the state budget, which would rise from just over $6 billion from 2011 to 2012 to a figure just shy of $9 billion over the two-year cycle.
Education spending is the hallmark of Mills’ package, with the key element being $187 million more for the public education system. That would bring Maine’s share of public school spending to 55 percent, finally fulfilling a 2004 voter referendum. That is buttressed with $47 million to Maine’s higher education institutions and $50 million for a school repairs fund.
“Funding for general-purpose education goes to two places — your kid’s classroom and your own pocketbook,” she said.
Health care is the second major piece, with $151 million dedicated to increased provider payment rates and expanded dental care coverage for Medicaid recipients. It anticipates proposals within the Legislature like replacing revenue from ending flavored tobacco sales and exempting menstrual products from sales tax.
Initiatives like $52 million for the rainy day fund — bringing it to a record sum of $320 million and a $15.4 million short-term boost in payments for hospitals and care facilities will likely find favor with minority Republicans in Augusta. It would also increase to revenue sharing with municipalities from 3.75 percent to the long-unmet statutory threshold of 5 percent of sales, income and service provider tax revenues by 2023, a goal that has advanced in initial State House votes with bipartisan support.
An early commitment to conform to federal tax law enshrined by the American Rescue Plan will likely head off difficult conversations around the issue that marked the first round of 2021 budget talks. Mills also said she “expects” a two-thirds vote on the proposal and looks forward to working with Republicans going forward, although she said it would be “premature” to name any areas where she would be willing to compromise to do so.
Republicans, who released their own budget demands nearly two weeks ago, are also likely to be bullish on a push to extend an income tax break for Mainers who worked through the pandemic. Other priorities not directly related to spending will be fought over in the Legislature.
Senate Minority Leader Jeff Timberlake, R-Turner, said the proposal has “all sorts of things that are going to be good,” pointing to funding for nursing homes, hospitals and dental care.
But he was critical of the decision to put only $52 million in the rainy day fund and said he would like to see more money for nursing home reimbursement rates, saying the industry is struggling to maintain a workforce. Timberlake was also skeptical of the long-term viability of the budget, saying the Mills administration had told Republicans the proposal would add 200 jobs.
“I think we need to be careful about overspending and living within our means,” he said.
The Legislature’s budget committee is expected to discuss the proposal for the rest of this week. Lawmakers are expected to be back together next week after a planned session was delayed when two members tested positive for the coronavirus virus within a week.
But committee work looks to be in the homestretch with few committee meetings scheduled beyond next Wednesday’s chamber session. Of nearly 1,700 bills referred to committees during the regular and special sessions, 65 percent have been reported out of committee, according to the Office of Policy and Legal Analysis.