Gov. Janet Mills is expected to release a two-year budget proposal on Friday that is "lean in nature" as the state faces financial headwinds, according to one of her top budget officials.
After years of large budget surpluses, revenues flowing to state tax coffers are expected to continue leveling off over the next two years. The result is that Maine is looking at an estimated $450 million gap between how much revenue the state anticipates taking in and how much it is slated to spend over the next biennium based on current commitments, according to state figures.
But that's not the only math problem facing lawmakers as the session begins on Wednesday. They will also have to deal with a nearly $120 million shortfall in MaineCare — the state's Medicaid program — before June 30.
Kirsten Figueroa, commissioner of the Maine Department of Administrative and Financial Services, attributed that gap to a combination of factors, including increased MaineCare enrollment during the pandemic and rising health care costs that are beyond the state's control.
In a memo to lawmakers, Figueroa wrote that they will "confront a difficult budget environment" over the next two and a half years.
"While, on balance, the state of Maine has enjoyed significant new revenues over the past several years that have allowed for investments in important new programs that have benefited Maine people, difficult decisions should be expected and difficult changes must be adopted this year to balance the budget and ensure the fiscal stability of the state budget moving forward," Figueroa wrote.
Lawmakers must adopt a new two-year budget before July 1. If recent trends hold true, the budget proposal released by Mills on Friday will serve as the building block of the final budget crafted largely by the Legislature's Appropriations and Financial Affairs Committee.
But Figueroa pointed out that lawmakers not only rejected proposals by the Mills administration last year to reduce spending in some areas but added spending in other programs.
Figueroa said the governor's proposal will seek to maintain "core commitments," such as funding 55% of K-12 education, providing free community college to recent high school grads and sending 5% of tax revenues back to municipalities. But she said balancing the budget will require a combination of program changes, spending cuts and additional revenues — but not "broad based" revenue streams, such as new income taxes.
Republican legislative leaders have been critical of Mills and the Democratic majorities in the Legislature over what they describe as out-of-control spending in recent years. Republicans narrowed the gap with Democrats in both chambers during the November elections.
On Tuesday, the House Republican Caucus agreed with what they described as Figueroa's "stark warning on Maine's fiscal condition."
"Republicans stand firm in our efforts to combat reckless spending initiatives that continue to exacerbate our fiscal condition," House Republicans said in a statement. "As noted by the governor, at the end of session last year, Republicans stood firm to defeat an additional $117 million in new spending. Maine already has one of the highest tax burdens in the country. As we confront today’s budget shortfall, Republicans will prioritize true 'needs' over 'wants' and oppose any efforts to raise taxes on Mainers."
