Biennial Budget

Gov. Mills’ budget grows Maine government to unsustainable levels

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Maine Gov. Janet Mills is trying to pass off her budget proposal, released last Friday, as a reasonable approach to meeting the state’s needs over the next two years. In reality, it amounts to a costly and substantial expansion of state government; $8 billion in spending over the next biennium, nearly $800 million of which comes as new spending, an 11 percent increase over the last budget.

The first budget signed by former-Gov. Paul LePage totaled $6.1 billion. Before leaving office, the last budget approved by LePage totaled $7.2 billion, an increase of about $1 billion in annual spending over an eight year period. Gov. Mills’ budget proposes about $800 million in new spending in the first biennium, or nearly four-fifths of new spending under LePage’s tenure.

According to the documents and statements released last Friday, Gov. Mills is prepared to spend approximately $150 million over the next biennium on Medicaid expansion. This exceeds the initial estimate of $55 million annually that was developed when the Medicaid expansion initiative appeared on our ballot in 2017. This estimate reflected a total of 70,000 Mainers receiving coverage under the program. There are 3,200 Mainers currently enrolled in expansion, according to media reports. The budget does not outline a long-term funding source for Medicaid expansion; it relies extensively on future revenues as projected by Maine’s Revenue Forecasting Committee.

Instead of returning surplus revenues to taxpayers in the form of tax reductions, Gov. Mills proposal relies on nearly every penny of projected revenue over the next biennium, about $7.9 billion, with just $383,000 to spare after using a number of one-time funding sources and leftover surplus funds. Even a slight economic downturn that causes a disparity between projected and actual revenues will force the state to enact a supplemental budget, opening the door for the use of the Budget Stabilization Fund and future tax increases.

The increase in revenue sharing, which is distributed to Maine’s cities and towns, is less than the 5 percent goal outlined by the governor’s allies and is being sold as a mechanism to provide property tax relief. However, no property relief occurs as a result of revenue sharing unless a municipality chooses to use revenue sharing funds to reduce the property tax liability of its residents.  A 2015 report by The Maine Heritage Policy Center shows that local governments consistently use revenue sharing funds to increase spending, not cut taxes. As Gov. Mills mentioned in her remarks, municipalities have priorities other than property tax relief. Towns and cities across the state will use these funds to grow their operations and, as a result, rely on and call for larger revenue sharing increases in the future to provide services well beyond their fiscal and economic means.

Sam G. Pilgrims | The Maine Wire

While the budget includes an additional $126 million for K-12 public education, it reaches the state’s 55 percent funding requirement for public education by using the same formula that Maine progressives criticized the LePage administration for using. As we noted when lawmakers agreed to spend an additional $162 million on public education to end the shutdown in 2017, throwing more money at a struggling system will not meaningfully improve public education for students in Maine schools.

Maine should remove the cap on charter schools and open the door to new and innovative styles of learning that meet the needs of students who are not succeeding in public schools. We should give parents choice in education and return autonomy over our classrooms to local districts, far outside the reach of politicians and bureaucrats in Augusta and Washington D.C. The four-year plan to pursue universal pre-K will prove to be a costly endeavor that will leave Maine taxpayers poorer and our children no better educated.

Gov. Mills stated proudly last Friday that her budget does not increase taxes or use the Budget Stabilization Fund, but a hiccup in our economy could result in future tax increases since this proposal relies so heavily on expected revenues. And while the proposal does not appropriate funds from within our rainy day account, an economic downturn could result in its extensive use. Gov. Mills budget proposal does not dedicate new funds to Maine’s rainy day account.

Spending almost every penny of projected revenue over a two year period, when taking on new initiatives such as Medicaid expansion and universal pre-K, is irresponsible and jeopardizes the strong fiscal condition of our state. Overall levels of spending in Gov. Mills’ budget proposal are far too ambitious for Maine over the next two years. Her decisions to expand Medicaid and put Maine on the path to universal pre-K will grow government dependency in Maine and put taxpayers on the hook for future tax increases unless revenues hold, for the next several years, at the levels projected over the next biennium and until both programs are fully implemented.

About Jacob Posik

Jacob Posik, of Turner, is the director of communications at The Maine Heritage Policy Center (MHPC) and the editor of The Maine Wire. He formerly served as a policy analyst at MHPC. Posik can be reached at jposik@mainepolicy.org.

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