The Maine Legislature passed a more than $300 million spending bill on Wednesday that funnels additional money to nursing homes and other social service programs but also increases taxes on tobacco and popular streaming services.
Democrats in the Legislature passed an $11.3 billion budget earlier this year that funds state government for the next two years. But lawmakers postponed until June decisions on a host of other initiatives and proposals in Gov. Janet Mills' original budget proposal.
This "Part 2" budget bill passed the House by a single vote, 74-73, Wednesday evening after an earlier defeat before winning final approval in the Senate on a vote of 19-15. Mills is expected to sign the budget bill.
The spending bill would plug a funding gap in MaineCare — the state's Medicaid program — during the second year of the two-year budget. It would also provide an additional $20 million in state and federal funds to nursing homes, $6 million to continue Maine's free school meals programs, $12 million to municipalities for General Assistance, nearly $40 million for child care workers and needy families and a 1% cost-of-living adjustment for direct care workers.
The bill also provides a 4% boost to Maine's public colleges and universities. But it eliminates Maine's free community college program after this year's high school graduates.
"This budget meets the moment," said Rep. Drew Gattine, D-Westbrook, co-chair of the budget-writing committee. "It addresses the biggest issues that Maine people are facing and protects critical investments that we have made in the past in health care, food security, education, housing and child care."
To offset some of that spending, Democrats also endorsed several targeted tax increases.
For instance, the budget bill would generate more than $110 million by increasing Maine's tobacco taxes, including by hiking the cigarette tax from $2 to $3.50 per pack. That is 50 cents higher than Mills had proposed. Taxes on recreational cannabis would also rise from 10% to 14%. And for the first time, Maine's 5.5% sales tax to audio and video streaming services like Netflix, Hulu and Spotify.
Republicans seized on both the growth in state spending in recent years and the tax increases as they voted unanimously against the bill.
"This will be represent the largest tax increase that we've seen in a long time in the state of Maine, therefore there will not be a single Republican vote for it in either chamber," said Senate Republican Leader Trey Stewart of Presque Isle. "We will not support this. We will remind people about this and we will continue to remind people about this in the years to come."
The bill stumbled in the House Wednesday morning after six Democrats joined every Republican in voting against the spending plan. But five of those Democrats later changed their votes to support the bill after it passed the Senate in a party-line vote.
"In this budget, we are doubling the child tax credit, funding rising operational costs of Maine’s universities, and investing in the child care workforce," Senate President Mattie Daughtry, D-Brunswick, said in a statement. "At a time when so much feels uncertain, this budget offers something solid: a commitment to the well-being of our communities and a hopeful vision for a stronger, more resilient Maine.”
“Maine people count on their elected officials to govern. They count on us to make sure the services they depend on — health care, education, housing, child welfare — will make our state stronger. And that is what this budget does,” House Speaker Ryan Fecteau, D-Biddeford, said in a statement. “We have protected investments in these critical areas while delivering a balanced spending plan that leaves money in the bank and puts Maine in a strong position for what may lie ahead. This is a budget for working Maine families and I’m proud of that.”
Republicans blasted the spending plan, however.
“Democrats are hell-bent on turning Maine into the most heavily taxed state in the country. We’re already ranked fifth in overall tax burden, and instead of showing any fiscal discipline, they’re now going after seniors’ pensions,” House Republican Leader Billy Bob Faulkingham, R-Winter Harbor, said in a statement. “Their latest tobacco tax hike doesn’t just miss the mark — it hits Maine’s working poor the hardest. These are the very people struggling to afford gas, groceries, and heating oil, and now they’re being punished even more by politicians who refuse to cut wasteful spending. If Democrats stay the course, Maine won’t just be unaffordable — it’ll be unlivable.”
The budget bill is among the last issues to be settled during the 2025 legislative session. Hundreds of bills received initial approval in both chambers but are sitting in the Appropriations and Financial Affairs Committee, waiting to see if lawmakers decide to fund them with the small pool of unspent money. Almost all of them will die for lack of funding.
Lawmakers will also have to return to Augusta to handle any vetoes from Mills.
