Legislative Session: Budget Battle Looming


Last year, the legislature struck a bipartisan budget deal that raised some taxes in order to avoid the worst spending cuts from Governor LePage. The governor proposed those cuts in order to pay for his tax breaks that disproportionately benefit the wealthy. That budget deal contained two provisions that require action by the legislature this year: $40 million in money going to towns (revenue sharing) has to be paid for by closing corporate tax loop holes; and about $20 million of savings has to be found through increased government efficiency.

During the fall, a group of experts and legislators met to agree on what corporate tax loop holes to close in order to prevent the property tax increases that would come if the $40 million of revenue sharing cuts occurred. The recommendations of this group eventually became a bill (LR 2721) sponsored by the chairs of the Appropriations Committee. This bill takes away tax dodging accounting gimmicks used by oil companies, eliminates tax breaks for Wal Mart and other big box retailers in the BETR program, and uses the state’s “rainy day fund” to make sure towns have the resources they need to avoid property tax increases and cuts to local services. As this is being written, it is unknown whether or not the Republicans on the Appropriations committee will support these proposals, or what fate they may have in the legislature generally.

Unfortunately, the provision requesting savings from government efficiencies turned out to be just another way for the Governor to cut important services. His proposed cuts include nearly $10 million from local education funding, $1.2 million for General Assistance that prevents homelessness, half a million dollars from early childhood education program Head Start and the elimination of the Welcome Center for highly skilled immigrants. If the legislature does not find an alternative to these cuts, the Governor has the power to “curtail” government spending in other areas. This means the governor could take actions like freezing state worker travel and not filling vacant positions. Again, at this point in the session it’s unclear what the ultimate result will be.

Additionally, Governor LePage is now claiming that cost over-runs have created a budget shortfall of tens of millions of dollars. Thus far, he has not provided any detailed information explaining what these cost over-runs are, or how they happened. MPA is working to make sure that these allegations of cost overruns do not become another pretext to cut important services or become camouflage behind which the Governor and his commissioners can hide their mismanagement of state government.

For example, Health and Human Services Commissioner Mary Mayhew failed to keep the Riverview mental health facility in compliance with federal laws, foregoing tens of millions of dollars of federal funding. She and the Governor also mismanaged the MaineCare rides program such that millions of dollars went to a corporation that often left patients stranded and others on hold for more than 24 hours waiting for service. The Governor took TANF money intended to be used to support low-income mothers and instead paid a private consulting firm $1 million to write a report against Medicaid expansion (now widely dismissed because of basic mathematical errors).

Once again, Maine’s budget problems have come down to tax cuts for the rich and the incompetence of the Governor. The 2014 elections and the promise of a more responsible Governor can’t come soon enough.