Gov. Mills proposes $900 million budget increase, without raising taxes

The proposed budget, which would continue free community college tuition and public school investments, is being formally unveiled in a news conference this afternoon before facing public hearings and possible changes by the Legislature.

AUGUSTA — Gov. Janet Mills on Wednesday proposed a $900 million increase in state spending over the next two years to maintain the state funding for public education, expand pre-kindergarten programs, continue to offer two years of free community college tuition and increase investments in behavioral health, child welfare and services for older Mainers and people with disabilities.

The 9.6% increase is based on projected increases in state revenues and would not require any tax increases or use of the state’s reserves, or rainy day fund, according to the Mills administration.

The budget proposal also maintains revenue-sharing with municipalities, provides $46 million in funding for a senior property tax relief program enacted last year and $17 million in addition funding to increase the state’s reimbursements to municipalities for the Homestead Exemption by 3% each year until the state reaches 100%.

Additional funding is also being proposed for people who cannot afford an attorney. Mills proposes an additional $17 million in funding for the Maine Commission on Indigent Legal Services, including $3.6 million to hire 10 new public defenders, adding to the five defenders included in the previous state budget. Another $13.5 million would be used to increase hourly reimbursement rates to assigned attorneys handling more complex cases for indigent defendants.

The $10.3 billion spending package unveiled Wednesday represents as 9.6% increase over the current $9.4 billion state budget.

The spending is based on revenue forecasts that predict Maine will take in $10.5 billion in revenue during the next two fiscal years and $11.5 billion in the following two years.

Mills is formally unveiling the budget in a news conference this afternoon and will submit it to the Legislature’s budget-writing committee for hearings and possible changes.

In a written statement, she described her proposal as an investment in the state’s “greatest asset: the Maine people.”

“Every budget I have offered has sought to give Maine people the tools and resources they need in a fiscally responsible manner, and this budget is no exception,” Mills said.

The budget does not use any of the state’s Rainy Day Fund, which currently stands at $901 million — close to the statutory limit of $970 million, which is 18% of the current general fund revenue.

Mills is also expected to introduce a supplemental budget for the current year that includes a payment of $25 million to long-term care facilities, including nursing homes, and an additional $25 million in federal and state funds ($6 million) for hospitals to help recover from the pandemic.

The supplemental budget also includes $6.6 million for a one-time cost of living payment for 37,6000 retired state workers, who would receive an average benefit of $175.

Senate Minority Leader Trey Stewart, R-Presque Isle, said Tuesday that his caucus would ensure that Mills does not raise taxes, while also funding nursing homes and addressing wait lists for services for people with disabilities.

To that end, the budget proposal includes $27 million in state spending for supporting people with disabilities, bringing the total state and federal investment to $84 million. Of that, $34 million would aim to eliminate wait times for MaineCare Section 29 services, $3 million in emergency funding for Section 21 services and $42 million for cost-of-living increases for providers.

Another $78 million state funding will be spent on services for aging Mainers, bringing the total state and federal investment to $169 million. About two-thirds of that — $116 million — will be used to help long-term care facilities, including Maine veteran’s homes, recover from the pandemic.

Mills is also proposing $94 million in state funding in behavioral health, bringing the total state and federals investment in mental health and substance use disorder to $237 million.

Democrats could pass a budget without Republican support because they control a majority of seats in both chambers. But a so-called majority budget would not take effect for 90 days, which means it would need to be approved by April to prevent a government shutdown on July 1.

Getting enough Republican buy-in to adopt a budget with the support of two-thirds of the Legislature would allow the budget to take effect immediately. But Republicans in the Senate showed during the debate of Mills’ $473 million emergency heating relief proposal that they’re ready to play hardball on budgetary matters.

Democrats passed a status quo budget during the 2021 pandemic without Republican support, but later debated and passed a supplemental budget to spend additional revenue. The move angered Republicans and became fodder to attack Democrats during the last gubernatorial election.

A strong revenue forecast could prompt calls for increased spending and expanded programs, but Mills has expressed concerns about a potential recession and has called for a fiscally cautious budget.

In late November, revenue forecasters predicted a $283 million surplus in the current fiscal year. That revenue was used to help pay for the $473 million emergency winter relief plan that was approved by lawmakers on Jan. 4.

Forecasters also increased their revenue projection by another $489 million over the next biennium, projecting revenues of $10.5 billion in revenue next fiscal year and $11.5 billion the following year.

The budget includes $101 million to maintain the state’s commitment to paying 55% of public education costs and $58 million to continue providing free lunch to school students. Another $10.5 million is proposed to expand universal prekindergarten.

The budget also invests in higher education, including $15 million to continue offering up to two years of free community college for high school graduates over the next two years and an $41 million increase in funding for the University of Maine System, Maine Community College System and Maine Maritime Academy.

Additional budget highlights include:

• $400 million for transportation projects that could unlock $1 billion in federal infrastructure dollars
• $15 million for in child welfare investments for foster care and adoption assistance, including increases in reimbursement rates.
• $26.8 million in liquor operation revenue to pay off outstand hospital debt, transitioning future revenues to the highway fund
• $4 million to continue providing student loan repayment assistance for health care professions in medicine, dentistry, behavioral health and nursing.