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What you need to know as the state budget talk intensifies

The State House is seen at dawn during the final week of winter, Thursday, March 16, 2023, in Augusta, Maine.
Robert F. Bukaty
The State House is seen at dawn during the final week of winter, Thursday, March 16, 2023, in Augusta, Maine.

News out of the State House has been increasingly dominated by discussions over the state’s next two-year budget, and more specifically, whether Democrats will use their majorities to enact a spending plan without Republican support.

Such a move has already been described by Senate minority leader Trey Stewart, R-Presque Isle, as “a tremendous blow” to the traditional budget process, and to the Legislature itself. Democrats, meanwhile, will likely argue that protracted negotiations with a GOP insistent on tax and spending cuts, but unwilling to put forward specific proposals, threatened a second government shutdown in six years.

A potential compromise was in the works late this week that could placate Dems worried about a shutdown without closing the door entirely on the GOP push for tax cuts this session. The deal is far from finalized, however. Republican budget negotiator Sen. Rick Bennett of Oxford said Thursday evening that he was “very optimistic that we will get there but there are other pieces . . . that will have to be considered and dealt with as well.”

Sifting State House rhetoric can be difficult, but it’s especially challenging in a budget-writing process that can seem impenetrable even to those who follow politics.

Here’s what you need to know as the budget talk intensifies.

The basics

Maine state government operates on a two-year spending plan. That plan, the biennial budget, is drafted in odd-numbered years that follow a fiscal schedule that begins July 1 and ends June 30 two years later.

The Legislature is charged with passing a new two-year budget in odd-numbered calendar years. This year is one of them. If no budget is in place by July 1, funding for most services in the state government expires. And, because Maine law doesn’t allow the deficit spending often utilized by Congress, state government would remain shut down until a new budget law is enacted.

There have been two government shutdowns in modern Maine history, 1991 and 2017. The latter shutdown was short but politically consequential because it’s shaping the discussions that are happening right now. More on that later.

The process

The governor proposes a two-year spending plan, but the Legislature can make additions, subtractions or other changes. That process is the charge of the Legislature’s budget-writing committee, or more formally, the Appropriations and Financial Affairs Committee.

The budget-writing committee is often described as “powerful.” That description is accurate in a sense, but it also underplays the role of the real influencers in the budget process: legislative leaders and the governor.

Generally, legislative leaders afford the budget-committee a fair amount of autonomy, allowing it to churn through the budget hearing process and adopt, amend, or discard budget initiatives that fail to garner broad support.

Legislative leaders often get involved in the most contentious parts, either negotiating through the committee members that they assigned, or directly with one another. Governors don't always have a direct role in such discussions, but they do have a final say when the budget bill finally reaches their desk for a signature, veto or line-item veto. For that reason, involving the governor or their legislative liaison is an important part of the process.

The politics

The budget is tremendously consequential legislation for Maine citizens, but also for state lawmakers and the governor. It’s often the most significant policy document to emerge in each legislative session.

For that reason, state lawmakers and the governor attach a lot of political significance to the final product. After all, specific budget provisions – such as the $850 payments most Mainers received last year via the current budget – can be great promotional fodder for reelection campaigns.

But the political emphasis on the budget can also make the process fraught with partisanship, and in recent years, outright brinkmanship. When that happens, July 1 transforms from an important funding deadline into a bargaining tool, especially for the party in the minority.

That’s because bills, including the budget, don’t go into effect for 90 days unless there’s two-thirds support in the House and Senate to enact them immediately as emergency measures.

In Maine, the budget process starts late and ends late. It’s common for budgets to be enacted days, or hours, before the calendar turns to July 1. The longer the negotiations take, the more leverage the minority party has to get what it wants – especially if it doesn’t mind getting blamed for a government shutdown.

There are a couple of ways for the majority party to mitigate the minority’s leverage. The first is to build super majorities in the Legislature, which almost never happens. The second is to use the majority it has and move quickly to enact a budget before April 1 – which means the budget goes into effect by July 1.

Such a move – “majority budget” in Augusta-speak – is rare, but it happened as recently as 2021.

And it could happen next week.

The state of play

With the April 1 deadline looming, a game of political and budgetary chess is playing out between Democratic and Republican legislative leaders and the Mills administration.

Republicans have been insisting for months that now is the time for tax cuts because the state government is receiving more tax revenue than it is spending. This has been a key part of the GOP platform for years and eliminating the income tax was central to former Gov. Paul LePage’s campaign against Mills last year.

But LePage’s bid for a third, non-consecutive term failed big-time. And Democrats – while not universally opposed to returning money to taxpayers, as evidenced by the recent relief checks – have been deeply skeptical of Republican plans for sweeping tax cuts.

Democrats also point out that, despite the opposition party’s constant demands for tax cuts, Republican leaders have yet to put forward a concrete proposal for reducing taxes. Republicans counter that Democrats need to signal a willingness to negotiate on reducing government waste.

“The people of Maine should be very aware of that: we have the biggest budget in the history of the state, over $10 billion . . . and yet the plan is to spend every nickel as it sits right now,” said Sen. Stewart, the Republican Senate leader on Tuesday.

And then there’s the Mills factor.

Stewart made those comments about an hour before he and legislative leaders from both parties huddled behind closed doors with the governor. As a former member of the Legislature’s budget-writing committee, Mills knows the process well. And when everyone emerged . . . no one was talking, except to suggest that negotiations would continue.

Ramifications of a majority budget

So why does this all matter?

As we stated earlier, majority budgets are unusual in Maine. Budget negotiators pride themselves on their ability to craft bipartisan spending plans able to win two-thirds support. Negotiations inevitably get tense – and sometimes downright nasty – near the end. But Maine has only failed to enact a state budget before July 1 twice in recent decades, precipitating those government shutdowns in 1991 and 2017.

The 2017 shutdown further soured relations between Democrats and Republicans in the Legislature. It also all but killed whatever remained of LePage’s relationship with Democratic leaders during the final year and a half of his term. And it factored into Democrats’ decision to advance a majority budget in 2021.

A majority budget would avoid a shutdown – but at a different political cost. It could seriously harm goodwill between Democratic leaders and the new Republican leadership in the House and Senate. And that could make Republicans less willing to negotiate with their Democratic counterparts on other issues where Democrats need a supermajority, such as on other emergency bills or to override a Mills veto.

And Republicans are guaranteed to bring it up during the 2024 elections during the next fight for control of the State House.

What to watch

As of Thursday afternoon, the budget-writing committee was advancing what Democrats are describing as a “continuing services” budget.

While the final product is not done, a source told Maine Public that it effectively trims the governor’s proposal below its original $10.3 billion to roughly $9.8 billion, while also conceding to Republican calls to honor a spending cap law enacted 20 years ago.

The idea behind enacting a continuing services budget now is to remove the prospect of a government shutdown from the budget process and allow both parties to negotiate changes to the budget in a separate bill -- potentially with an income tax cut -- later this spring.

While that would also arguably strip Republicans of some negotiating leverage, some in the GOP might consider it a better alternative than being removed from the negotiations altogether. Democrats took a similar path in 2021, but so far, Republicans seem more open to the idea this time.

That could change, of course. As of Thursday evening, the budget committee was sailing through early and unanimous votes on budget initiatives, but it was clear that more difficult votes loomed.

Maine's Political Pulse was written this week by State House correspondent Kevin Miller and chief political correspondent Steve Mistler, and produced by digital news reporter Esta Pratt-Kielley. Read past editions or listen to the Political Pulse podcast at mainepublic.org/pulse.

Journalist Steve Mistler is Maine Public’s chief politics and government correspondent. He is based at the State House.