Gov. Janet Mills on Wednesday proposed a $10.3 billion budget that will largely shape political negotiations in Augusta and state public policy for the next two years.
“If we want to build a stronger, more prosperous state where opportunity is available to all, then we must invest in the infrastructure that supports our greatest asset: the people of Maine,” Mills said in a press release.
Mills called the budget proposal “fiscally responsible” and said part of her aim in offering it was guarding against the possibility of a looming recession.
The budget is a significant increase in spending over previous years. For 2022-2023, Mills’ budget came in at $8.5 billion. In the current biennium, that number grew to $9.4 billion. Wednesday’s proposal would increase total state spending by $900 million.
Republicans mostly scoffed at the proposal, drawing attention instead to the $1.5 billion in surplus revenue the state collected in taxes in the last biennium. While much of that money was sent back to taxpayers in form of pre-Election Day checks, Republicans said the better way to deal with such surplus monies would be structural, long-term reforms, like reducing taxes.
“State government has over-collected $1.5 billion from taxpayers who are struggling to heat their homes, buy groceries, fill their gas tanks and pay rising prices on everyday items,” legislative Republicans said in a joint statement.
“We need to stop the cycle of over-collecting money from people,” they said. “Current revenue projections allow us to explore ways of letting people keep more of their hard-earned money to address inflation.”
If the early negotiations over LD 3, the big spending package passed last week, are any indication, then attempts to trim taxes in Maine are likely to find few allies in the Legislature’s Democratic majorities. Republican lawmakers proposed amendments to that bill that would have replaced direct payments to Maine residents with a three-month sales tax holiday, and that plan was soundly rejected by Democrats.
Republicans said in their statement that they’re committed to working with Democrats to get a budget proposal that earns two-thirds support from both the House and the Senate, but with full control Democratic control of the Legislature, Republicans have little leverage when it comes to extracting compromises from Mills. Bipartisan “two-thirds” budget deals are something of a tradition in Augusta. But Mills no longer faces the prospect of a re-election fight, so there’s less incentive for her to give Republicans a seat at the table.
If Republicans push too hard for their priorities, they could find themselves removed from meaningful negotiations. And, if more liberal lawmakers decide the real negotiations should be between the far left and Mills, progressives may be able to sideline Republicans completely, forcing Mills to address complaints from the left that the budget isn’t spending enough on progressive priorities.
Such are the consequences of leverage. In this case, Republicans have only the inclination Mills might have to earn the “bipartisan” stamp for her budget. Whereas House Speaker Rachel T. Ross (D-Portland) and Senate President Troy Jackson (D-Aroostook) have majorities.
Mills’ budget represents a continuation of the expansion of state government, both in terms of its activities and total spending, which began when she first entered office. According the the Maine Policy Institute, the spending increases contained in Mills’ budget proposals have steadily increased every two years, far outpacing any increases in inflation.
(Disclosure: The Maine Wire is a project of the Maine Policy Institute.)
Nick Murray, a policy analyst for MPI, said Mills budget proposal was not the prudent move for a state with one of the highest tax burdens.
“Piling on almost $1 billion in additional spending is not fiscally responsible. Mainers continue to be fleeced by inflation and one of the highest tax burdens in the country,” said Murray.
“Meanwhile, state government coffers have never been more flush with cash,” he said.
Murray said Maine’s General Fund spending has grown by 22 percent over the last four years. He said even blue states like Connecticut and California have recently considered reducing taxes given the present economic conditions.
So what are the key components of the budget framework that will shape the near future for lawmakers?
$243 million will go to educational initiatives, including $101 in funding for Maine’s government-run schools, $58 million for universal free school lunch, and $15 million to continue the free community college program. The education spending also includes increased money for the UMaine System.
$550 million will apply to various health care initiatives, including $237 million for mental health and substance use disorder services, part of which will increase MaineCare reimbursement rates for providers. The budget also allocates $15 million for the child welfare system, which was the subject of a scathing report last week from an independent government watchdog.
$471 million of the budget will go toward infrastructure, including transportation and housing. The bulk of that — $400 million — is headed to the Maine Department of Transportation, while $30 million will support the Maine Housing Authority’s affordable housing programs.
On property taxes, the budget will maintain funding for municipal governments under the five-percent revenue sharing agreement and increase funding for the Homestead Exemption. The plan would fund for ten years a proposal from the last Legislature to allow Mainers over 65 to freeze their property tax rate if they’ve owned their homes for at least ten years.
The proposal would also set aside $3 million for climate change and related grants and incentive schemes, while earmarking $6 million for PFAS mitigation.
On the last item, Mills may have picked a fight with the left flank of her party, specifically the $3 million for climate change, which amounts to a rounding error. Progressive activists, mostly in southern Maine, will undoubtedly argue that more money is needed to address the apocalyptic threat of anthropogenic global warming.
The $10.3 billion budget comes just a week after Mills won support in the Legislature from a separate $473 million spending proposal, most of which went toward $450 checks that should hit the mail soon.
Depending on the appetite the Legislature’s more liberal members have for picking a fight with the governor, the budget bill could be headed to her desk for a signature in under three months.