Conservatives, progressives alike object to $107M savings in Mills’ budget proposal

Though for different reasons, policy organizations on both sides of the aisle are not supportive of Gov. Janet Mills’ proposal to save $107 million in a new reserve for the next biennium. 

Conservatives would prefer to see the excess revenue used to reduce taxes. Progressives argue the excess funds should be put toward programs that would address the immediate needs of Mainers, including those facing cuts. 

The proposed savings were part of the governor’s supplemental budget plan, which also called for adding $71 million in spending to the biennial budget passed last year. Mills’ proposal, released last week, prioritizes funding for public safety, mental health, extreme weather preparedness, housing and child welfare.

Because the Maine Legislature operates on a two-year cycle, the supplemental budget amends the biennial budget, which last year funded expansions of several social safety net programs, some of which saw cuts in the proposed supplemental. 

“The governor’s supplemental has proposed a use for all of the money, whether that’s dedicating it towards programs or saving it for the future biennial,” Scott Ogden, the governor’s deputy chief of staff for communications and strategy, told Maine Morning Star. “The supplemental proposal is now in the hands of the Legislature and is subject to their changes, as they see fit.”

While those advocating for progressive causes offered reserved praise for the initiatives Mills seeks to boost, they criticized some decisions for addressing side effects rather than tackling the root cause of issues. 

As the budget-making Appropriations and Financial Affairs Committee begins public hearings on the supplemental this week, Maine Morning Star spoke with policy analysts about what was included — and what was left out — of the budget proposal and what that may signal for the work to come.

Saving for the future, a disputed move

Both the left-leaning policy organization Maine Center for Economic Policy and the conservative Maine Policy Institute criticized Mills’ decision to store away $107 million in the special reserve fund — though for different reasons. 

Josie Phillips, MECEP’s state priorities partnership fellow, said the large savings are inappropriate both because Maine is in a fiscally resilient position and because the budget has left off or cut funding for programs that she said would make a clear difference for Mainers. 

Prioritizing public safety, housing and savings, Gov. Mills releases $71 million budget proposal

General fund revenue is projected to grow by $123 million per year on average over the next four years, with the growth rate accelerating over time. Additionally, Maine’s Budget Stabilization Fund, otherwise known as the rainy day fund, is at its statutory maximum of nearly a billion dollars.

“There are so many needs facing barriers,” Phillips said. “We’re experiencing a shortage of affordable housing, a shortage of direct care workers, a shortage of public employees, especially teachers and education staff — just to name a few.”

These needs will remain unaddressed and associated bills will pile up if the issues are not addressed fully, Phillips said, adding “it’s only fiscally prudent to save money if all of your bills are paid.” 

The Maine Policy Institute is also not keen on the savings but wants the funds to be used in another way. 

“The new reserve may be the least fiscally irresponsible thing the governor has proposed in a supplemental budget,” said Jacob Posik, director of legislative affairs for MPI, “but we feel strongly that Maine taxpayers deserve relief after several years of explosive spending under the Mills administration.”

Posik criticized the overall increase in state spending throughout Mills administration. Rather than not spending money at all, MPI wants to see the state’s excess funds be used to provide tax relief to Mainers. 

“For several consecutive years the state has enjoyed excess revenue and continues to pile hundreds of millions more on in new spending instead of returning this money to the people of Maine who sent it to Augusta in the first place,” Posik said. “There’s nothing ‘restrained’ about setting aside money for expenses the state has already signed onto in past budget cycles.”

The first hearing on the budget bill on Tuesday also saw opposition to the proposed savings, including from Mark Brunton, president of the Maine Service Employees Association, the labor union representing state workers. Brunton described Mills’ proposal to save $107 million as “nothing more than an end-run around the statutory cap on the rainy-day fund.” Rather, he said, those funds could be used for state needs, pointing to the fact that one in six positions in state government remain vacant, which he attributed in part to low pay. 

MSEA has been at odds with the Mills administration about the disputed wage gap between state workers and their private sector counterparts. The state last conducted a market study of state employee wages in 2020, which found state workers were paid on average 15% less than their private sector equivalents.

Department of Administrative and Financial Services Commissioner Kirsten Figueroa testified that rainy day funds should not be used to cover long-term, ongoing funding, because they are intended to cover general fund revenue shortfalls from economic downturn.

Defending the savings, Figueroa cited plateauing revenue projections until 2026, overall rising costs and unexpected needs that may arise with programs the Legislature has already budgeted for but have yet to start. 

“We will need to be mindful as we finalize our efforts here together,” Figueroa urged the committee. “To make the tough decisions to say no to bills that, while we all agree have policy value, add substantial ongoing appropriations without ongoing options for funding.”

Legislators on the Appropriations Committee remained skeptical of the proposed savings. Sen. Rick Bennett (R-Oxford) questioned the forecasting metrics used to justify the savings, in light of the positive outlook for Maine’s economy. Rep. Drew Gattine (D-Westbrook) asked how the administration determined the $107 million figure. Figueroa said she will return with a breakdown for future work sessions. 

Rolling back social safety net expansions

The biennial budget passed last year expanded the social safety net in Maine through various programs, such as increasing child care subsidies and expanding the Medicare Savings Program.

In her supplemental budget, however, Mills proposes delaying the former and rolling back funding on the latter. 

The expansion of the Medicare Savings Program aimed to help low-income retirees by raising the threshold for income eligibility and eliminating an asset test. 

The state was supposed to implement the changes by March 1, opening up the program to an estimated 19,000 people, but the funding to do so was not included in the supplemental budget. This rollback would save the state $14 million in direct expenditures, however it leaves federal resources untapped because the expansion would bring in an estimated $38 million, Phillips from MECEP said.

“We felt that this was a particularly necessary program,” Phillips said. “It helps from an equity lens because the older adults who are struggling in retirement are disproportionately people who experienced economic discrimination throughout their careers, which lowered their ability to find good paying jobs or directly impeded the wages that they got.” 

Dania Bowie, development and communications coordinator for Maine Women’s Lobby, also noted that the majority of people who qualified for the expansion were women, people of color and those in the LGBTQ+ community.

Bowie also criticized the rollback of this program in light of the millions of dollars Mills proposed saving. “Our budgets are a moral document,” Bowie said.

Figueroa addressed this rollback on Tuesday, explaining it as a matter of long-term sustainability. Partially implementing the Medicare Savings Program, she said, allows Maine to maintain benefits while “not expanding it beyond a point we feel we cannot maintain in the long run.”

Another commitment that Mills altered is the timeline for the expanded child care subsidy. After telling providers that expanded eligibility would be available this spring, Mills proposed delaying implementation until July 1. 

“Essentially, it was telling them one thing and then pulling the rug out from under them when they’re very much in need of the support,” Phillips said. 

Mills’ biennial budget had also provided an ongoing stipend to child care workers with young children in the child care subsidy program, while her supplemental budget would turn this policy into a limited two-year program, Phillips added. 

During testimony on Tuesday, Adam Zuckerman, a lobbyist for the progressive advocacy organization Maine People’s Alliance, also criticized what he characterized as short-sighted cuts to the Supplemental Nutrition Assistance Program (SNAP) and general assistance, which is available to people who do not have enough income to meet their basic needs. 

Mills’ proposed budget removes the SNAP provision that had allowed asylum seekers to receive benefits while they are looking for work after they receive their work authorization. Under federal law, asylum seekers have to wait at least half a year after filing their asylum claims before receiving authorization to work. 

Regarding general assistance, the proposed budget prevents municipalities from exceeding the maximum amount of assistance more than once per year. These funds can help people make rent if they’re at risk of losing housing, for example. 

Reserved praise for funded programs

None of the items that are proposed to receive funding in Mills’ budget align with Maine Policy Institute’s priorities, Posik said. “Excess revenue should be returned to the people of Maine — period,” he said.  

On the other hand, Phillips at MECEP praised some aspects of the proposal for continuing efforts that help advance economic equity, although she said the proposals often failed to address the heart of the state’s challenges.

For example, Mills proposed $10 million to build more affordable housing and $16 million for emergency shelters. Phillips agreed this funding is helpful, though she noted that it doesn’t address the cause of people’s homelessness. 

“It’s an after-the-fact kind of measure — which is good because homelessness is increasing so we absolutely need to deal with that — but we believe that a more cost effective tool would be providing rental assistance, especially to low income renters, so they don’t fall into that position in the first place,” Phillips said.

Another example is the reimbursement rate for nursing homes, which Mills proposed increasing in her budget. “Nursing homes are struggling to keep their doors open and this would provide much needed relief to them,” Phillips said. “However, the entire direct care continuum is struggling right now.”

Beyond nursing homes, this continuum includes home- and community-based services as well as assisted living facilities. “We would like to see more measures that address the problem at the entire continuum rather than narrowing down to one specific segment of it,” Phillips said, pointing to a proposal that advanced with a favorable vote out of committee that would incentivize people to enter the direct care workforce by providing tuition credits.

Tuesday’s hearing on the savings proposal will be followed by a slew of public hearings on the budget bill scheduled through early March. 

The Appropriations Committee will hear testimony on budget items that pertain to the Education and Cultural Affairs Committee on Wednesday, including the proposal to restructure how the state provides special education to its youngest residents. Thursday will be dedicated to testimony on items related to the Taxation Committee as well as the Committee on Innovation, Development, Economic Advancement and Business, and on Friday, it will hear feedback on items under the purview of the Housing Committee and Veterans and Legal Affairs.