Biennial Budget

Governor Mills’ revised budget grows spending but sends $20 million to rainy day fund

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Since Governor Janet Mills released her biennial budget proposal in February, the fiscal landscape in Maine has changed significantly. The Governor’s initial plan proposed spending more than $8 billion over the next two years while leaving just a $383,000 cushion to protect Maine taxpayers and the Budget Stabilization Fund (rainy day fund) in the event of an economic downturn.

First, lawmakers passed a supplemental budget which, coupled with the governor’s proposal, put Maine roughly $5 million in the red by fiscal year 2021. Because Maine’s budget must be balanced, lawmakers could not move forward with the governor’s original plan as proposed. In early May, Maine’s Revenue Forecasting Committee released revised figures showing an increase in projected revenues by $120 million through fiscal year 2023.

With new revenues to be spent, Governor Mills released her budget change package on Tuesday, a plan that alters some of her original proposal and adds new spending priorities to her budget, known as LD 1001 in Augusta.

Fiscal conservatives have been looking for Governor Mills to bolster the Budget Stabilization Fund after her first proposal failed to allocate a single penny to the state’s rainy day account. Since assuming office, Mills has raided the rainy day fund on two separate occasions. The package released Tuesday is a change in pace — it would add $20 million to the rainy day fund to help protect taxpayers and mitigate the impact of an economic downturn. The governor should have made a much larger investment in the rainy day fund, though it appears she has acknowledged the criticisms of her initial proposal and responded accordingly.

In addition, the package transfers $20 million to the School Revolving Renovation Fund, which is operated by the Maine Municipal Bond Bank. The School Revolving Renovation Fund issues interest-free loans to repair and renovate schools in the state. This proposal also dedicates $500,000 to the Governor’s Climate Council over the biennium. The Maine Climate Council has not yet been established yet but would be created through the enactment of LD 1679 this session. The bill is scheduled for a public hearing on Friday, May 17.

The second iteration of the governor’s budget does even less for individuals with intellectual and developmental disabilities than her original proposal. The plan seeks to reduce initial proposed state and federal funding amounts for individuals on Section 21 waitlists with intellectual disabilities by $12.5 million in fiscal year 2020. Despite the needs of these individuals, the Mills administration continues to enroll able-bodied adults in Medicaid expansion. More than 23,300 individuals have enrolled since January 2019.

The plan also dedicates $5.5 million in one-time funding from the Fund for a Healthy Maine to the Office of Substance Abuse and Mental Health Services, as well as $5 million in one-time funds from the same source for sexual assault and domestic violence prevention and victim services.

The budget creates 48 new positions for the Dorothea Dix Psychiatric Center’s new unit that will cost the state an additional $12.5 million. Lastly, the package adds a total of 62 new positions to the Office of Child and Family Services, representing an eight percent increase in staff that will cost the state an additional $11 million.

As she did in her original proposal, Governor Mills’ revised budget squanders an opportunity to provide meaningful tax reform to improve our competitiveness and grow Maine’s economy. Even with revisions, the proposal is filled with waste and poses a legitimate threat to the future fiscal health of our state.

About Adam Crepeau

Adam Crepeau serves as a policy analyst at The Maine Heritage Policy Center. He can be reached at acrepeau@mainepolicy.org.

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