In Depth

Maine’s ARPA spending package becomes law without legislative compromise

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On July 19, the Maine Legislature voted to approve a plan for spending the $1.1 billion the state received from the federal government as part of the American Rescue Plan Act (ARPA). Gov. Janet Mills signed LD 1733 into law hours after the legislature’s final vote.

As originally written, LD 1733 was an emergency bill which would have gone into effect immediately after becoming law. However, it failed to receive support from a two-thirds majority in both legislative houses and will now go into effect in 90 days after adjournment.

LD 1733 passed the House by a vote of 70-49, with no Republicans joining the Democratic majority, and by a party-line vote of 21-13 in the Senate. As in the House, the Democratic majority prevailed.

In a preview of the partisan support that resulted in the bill ultimately being passed, the Appropriations and Financial Affairs Committee’s majority report for LD 1733 passed along party lines by a vote of 8-4. 

Following the vote, Mills’ office issued a press release urging both parties in the legislature to work together to achieve the two-thirds majority required for the bill to be implemented immediately.

“I am asking both Democrats and Republicans to continue working, to compromise, and to reach consensus so that this bill may reach my desk with 2/3 support and we can put its critical investments to work for Maine people today – not three months from now. Our state, our people, and our economy depend on immediate action,” Mills said in a prepared statement.

But the failure of the legislature to pass LD 1733 by a two-thirds majority did not stop Mills from signing it into law. 

“While I would have much preferred that it have the broad support needed to implement its investments immediately, given the Legislature’s failure to achieve any meaningful compromise prior to today’s vote, I was not convinced that vetoing it would lead to a better result for the people of Maine. Moreover, I was not interested in fomenting any further uncertainty around the plan’s investments with a veto,” Mills said in a press release announcing she had signed the bill. 

Republican objections to LD 1733’s final passage

But, according to Senate Republicans, there was broad support for a bipartisan agreement on LD 1733, which Democrats decided to abandon during the July 19 session. 

“At the last minute and after an agreement had been reached, Democrats introduced dozens of new spending items. Chief among these was a requirement that tens of millions of dollars in housing construction contracts be directed toward Democrat-supporting labor unions rather than awarded to the most qualified contractors who provide the lowest bid,” the Maine Senate Republicans said in a press release issued on July 20.

Appearing on Mike Violette’s show on 1160 WSKW on July 20, Sen. Jeff Timberlake (R-Androscoggin) outlined two issues he took with Democrats’ funding initiatives in LD 1733. One of these was the $20 million for housing projects the bill ties to project labor agreements.

The new law awards the Maine State Housing Authority $20 million for existing financing programs for developers expanding affordable housing options. But the funding comes with the condition that the housing authority require the developer to enter into a pre-hire project labor agreement with workers who will build affordable housing. 

According to the law, “A project labor agreement must apply to all workers who build the affordable housing, including those employed by a contractor and all subcontractors of the developer. A project labor agreement must protect the collective bargaining rights of the workers involved in building the affordable housing.” The law also requires a good-faith effort to promote workforce diversity and allows the housing authority to refuse to award a contract if it finds a developer has not met this requirement.

Timberlake also objected to the amount of funding the bill puts towards funding unemployment insurance. The law requires the State Controller to transfer $80 million in State Fiscal Recovery Funds to the Department of Labor’s Unemployment Compensation Fund by no later than November 30. 

According to Timberlake, Republicans wanted to direct $100 million towards unemployment, fully funding the fund and avoiding tax hikes when federal employment enhancement expires in September.

The Goals of Maine’s ARPA Funds

Mills’ initial proposal for the Maine Jobs and Recovery Plan divided funding projects into three broad categories. It contained $260 million for immediate economic recovery, $305 million for long-term economic growth, and $547 million for infrastructure revitalization. Though the final funding levels differed, LD 1733 provided funding for many of the same projects originally proposed by the governor.

As part of the legislation’s goal to promote immediate economic recovery, Mills’ plan originally called for $80 million in funding for recovery grants and loan guarantees. LD 1733 provides $58.4 million in loans and grants in fiscal year 2021-2022 and $20 million in fiscal year 2022-2023. 

It provides $20 million in economic recovery grants for businesses in sectors still struggling to recover from COVID-19 in fiscal year 2021-2022, as well as $5 million in business assistance programs through the Finance Authority of Maine (FAME) in both fiscal years 2021-2022 and 2022-2023. 

FAME also receives $31.4 million in fiscal year 2021-2022 and $15 million in fiscal year 2022-2023 for loans and loan guarantees for businesses having trouble securing investment capital as a result of COVID-19. That funding is also allocated to the Maine Rural Development Authority to provide capital for rural development projects. 

The law also creates the Small Business Health Insurance Premium Support Program within the Department of Professional and Financial Regulation. This is a temporary program established to provide payments to small group health insurance carriers with a goal of reducing insurance premiums for small businesses and their employees. 

The program must “provide for the issue of relief payments to small group health insurance carriers based on actual credits made monthly by the carriers.” This must result in the reduction of premiums by $50 per employee per month for 18 months, beginning November 2021. The program received $19.5 million in funding in both fiscal years 2021-2022 and 2022-2023. Mills’ original plan called for $15 million to launch a health workforce initiative.

Funding for programs designed to spur immediate economic recovery also include various measures to promote diversity in businesses. LD 1733 provides $1 million in funding for technical assistance grants for business diversity initiatives, as well as $500,000 in one-time funding for entrepreneurial training for underrepresented populations.

As part of the plan for creating long-term economic growth, LD 1733 creates the Maine Health Care Provider Loan Repayment Pilot Program within FAME. The program will be available for health care professionals who plan to live and work in Maine for at least three years. The program will pay up to $25,000 per year on the balance of a recipients’ loan balance. In aggregate, the program will pay either $75,000 or up to 50 percent of the outstanding balance, whichever is less. 

The bill also includes other financial relief and incentive programs for healthcare workers, including one-time funding of $1 million for the Doctors for Maine’s Future Scholarship Program and one-time funding of $1 million for the Maine Health Care Provider Loan Repayment Fund. The fund will make loan repayments for eligible participants to address workforce shortages related to COVID-19. 

The bill also provides funding for 16 temporary CareerCenter Consultant positions in the Department of Labor. The bill provides $600,000 in funding between fiscal years 2021-2022 and 2022-2023 for two CareerCenter consultants who will “provide information on stackable credentials and prior learning credits and to assist out-of-state and foreign-trained health care workers to quickly recredential as licensed providers in the State.” Funding for these positions was originally in the supplemental budget but was moved into LD 1733.

Mills’ original proposal called for $5 million to be spent on a program to attract remote workers to Maine. LD 1733 provides $2.5 million to clarify rules and requirements for employees and employers, provide marketing and outreach for this information, consider the tax implications of offering longer-term incentives and develop materials for out-of-state employers with remote workers in Maine.

Mills’ original plan also included a call for regulatory reform and proposed $8 million in funding to increase licensing efficiency. LD 1733 provides this by giving the Department of Environmental Services $4 million in fiscal year 2021-2022, and again in 2022-2023, to build an online licensing and compliance portal for contracted services subject to regulation.

The bill also included various funding projects intended to revitalize the state’s infrastructure. This includes funding for the state’s physical infrastructure, as well as for family infrastructure.

Mills’ Jobs and Recovery Plan called for $20 million to expand childcare and early childhood infrastructure. LD 1733 includes $10 million in funding for the Department of Education to establish a limited-period Contract Grant Specialist position and for a contracted distinguished educator position to “provide technical assistance and professional learning to school administrative units and prekindergarten expansion.” The $10 million in funding also covers grants to schools to establish new or expanded prekindergarten programs, giving priority to programs that “engage in community partnerships, provide longer duration of education, support inclusive programming and enroll socioeconomically disadvantaged students.”

The bill provides another $10 million to the Department of Health and Human Services (DHHS) for one-time funding of grants to renovate, expand or construct child care facilities and to create a limited-period social services manager position. 

Other infrastructure initiatives include $50 million for the Efficiency Maine Trust to fund weatherization and efficiency upgrades for homes. The funds are to be used to secure efficiency grants by providing matching funds and incentivizing industries and businesses to invest in energy-cost saving measures. An additional $50 million is provided to the Maine State Housing Authority to expand affordable housing options for workers and their families to own or rent. The funds can be used on existing financing programs or to develop new programs.

The bill also provides $21 million to the Maine Connectivity Authority. The funding will be used to expand access to affordable high-speed broadband. The connectivity authority must “collaborate with organizations representing marginalized and historically disadvantaged groups when making determinations regarding the distribution of these funds.”

Mills signed legislation creating the Maine Connectivity Authority in June. The original Jobs and Recovery Plan called for $150 million to establish the Maine Connectivity Authority to achieve universally available broadband. Investment in broadband was also part of Mills’ supplemental budget proposal. The governor has proposed $1.8 billion to expand broadband access to rural and underserved areas in the state. She also secured approval for a $15 million bond proposal to expand broadband in 2020. 

Other Programs in LD 1733

In addition to providing for the allocation of Maine’s ARPA funds, LD 1733 also makes several changes to state laws. LD 1733 allows certain eligible individuals to defer their property taxes on their homestead. Individuals are eligible if the taxpayer is 65 or over, unable to be employed because of disability, had an income of less than $40,000 for the year in which he or she is applying for a deferral, or if the taxpayer’s homestead receives an exemption. 

The bill also allocates just under $22 million to the Department of Administrative and Financial Services for the purpose of supporting financial management of State Fiscal Recovery Funds provided to Maine by ARPA. 

The bill allocates approximately $3.2 million of ARPA funds to reimburse municipalities for deferred property taxes.

It creates a program to provide free well water testing for low-income residents and requires landlords of residential buildings to test wells used to provide water to their tenants annually. It allocates just over $100,000 in ARPA funds for this purpose. 

The bill also creates the Family Caregiver Grant Pilot program in DHHS. This will increase the number of families served by the Respite Care Fund and alleviate the cost of providing home care for an adult by providing a grant of up to $2,000 a year to a family caregiver. The bill allocates $4.5 million in ARPA funds for this purpose.

The bill also establishes a pilot program within DHHS that would allow the parent of a child eligible for in-home care under MaineCare to register as a personal care agency and be eligible to receive reimbursement for the services they provide to their child. In order to be eligible, the parent must designate a third person as an employer. The employer must receive approval from DHHS and the parent. The bill provides $465,000 in ARPA funds for the pilot program.

It also creates the Housing Navigation Pilot Program, a two-year pilot program within the Maine State Housing Authority. The program will hire individuals, called “housing navigators,” who are affiliated with local housing authorities, general assistance programs or nonprofits to help tenants locate housing and complete the rental application process. The bill provides $1.5 million in ARPA funds for the program. 

In addition, LD 1733 creates a two-year pilot program to provide education and career guidance, support and services to underemployed and unemployed individuals to help them acquire the education, skills and licensure they need to participate in the workforce. The bill provides roughly $780,000 in ARPA funds for this purpose. 

The bill also increases the amount of retired teachers’ health insurance which the state is required to pay. Prior to the passage of LD 1733, the state was required to pay 45 percent of insurance costs. LD 1733 requires the state to pay 45% of costs until June 30 and then increases the requirement to 55%.

Rules for Using ARPA Funds

The federal Department of the Treasury’s Interim Final Rule provides guidelines for how ARPA funds may be used. Legitimate uses of funds include responding to the public health emergency and its negative economic impacts, including “assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.”

The rule also allows funds to be used to provide “premium pay to eligible workers” who performed essential work during the public health emergency. It further allows funds to be used “for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency.” Investment in water, sewer, and broadband infrastructure is also allowed.

The rule also states ARPA funds cannot be used to deposit funds into any pension fund or to offset a reduction in net tax revenue resulting from a change in law, regulation or administrative interpretation.

About Katherine Revello

Katherine Revello is a reporter for The Maine Wire. She has degrees in journalism and political science from the University of Maine. Her writing has appeared in Reason, The Washington Examiner, and various other publications. Got news tips? Contact Katherine at krevello@mainepolicy.org.

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