Gov. Janet Mills urged lawmakers on Tuesday to work with her administration — and each other — to enact a state budget that continues recent investments in education, health and other initiatives while covering anticipated shortfall.
During a more than hour-long speech, Mills told the House and Senate that her $11.6 billion budget proposal would protect “core commitments” made in recent years. She also described the "targeted" taxes and fee increases in her spending plan as reasonable measures that will generate revenues without imposing heavy new burdens on taxpayers.
“I have put forward a budget that does not rely entirely on either revenue increases or cuts to programs,” said Mills, a Democrat. “Instead, it does both to bridge the gap and continue to invest in things we all support, like education, revenue sharing, public safety, higher education, and school meals.”
Mills pointed to statistics showing the local economy has grown faster than the national average since the pandemic but that, like other states, Maine faces financial headwinds as tax revenues level off and federal assistance declines. As a result, Maine is facing an estimated $450 million shortfall over the next two-year budget as well as a roughly $118 million shortfall in the state’s Medicaid program, MaineCare, through June 30.
The governor’s proposal would continue to provide free community college to recent high school graduates and maintains the state’s responsibility to cover 55% of K-12 education costs. It would also continue returning 5% of state tax revenues to municipalities, with a goal of reducing pressure on local property taxes, while continuing to provide free meals to all public school students.
But Mills also urged lawmakers to carefully consider the “targeted" tax and fee increases included in her two-year spending plan while saying she won’t support broader increases on sales and income taxes. The governor has proposed increasing taxes on tobacco and cannabis, collecting sales taxes on video and audio streaming subscriptions and scaling back a pension tax deduction for wealthier Mainers.
"These targeted increases all told, I believe, are reasonable, and they raise revenues while leaving the wallets of most Maine families untouched," Mills said.
Republicans vowed to oppose every effort to raise taxes. Instead, Republicans accused Democrats who have controlled the Legislature and the Mills administration of spending too much when times were good and called on Democrats and the Mills administration to work with them on ways to reduce government spending.
"This budget seems like it was written by a millionaire out of touch with reality," Rep. Billy Bob Faulkingham of Winter Harbor, the House minority leader, said in the official Republican response. "Taxes on paint cans, digital streaming, prescription drugs, cannabis, tobacco products, retiree pensions, and even an ambulance tax, are taxes on the poor and middle class. This tax and spend mentality is threatening our children’s future."
Budget proposals from governors typically serve as the building blocks or a starting point for negotiations in the Legislature, which must approve a balanced, two-year budget by July 1. Lawmakers are also working on a shorter-term spending plan for the budget year that ends on June 30.
In her speech, Mills acknowledged that her budget proposal received immediate bipartisan criticism, joking at one point that "even Old Orchard Beach isn’t big enough for all the lines in the sand some of you have already drawn."
While Republicans oppose the tax increases, some Democrats have criticized proposed spending cuts, especially to health and human services programs. And Mills said some of her "Democratic friends" want to increase taxes on the wealthy or change tax breaks for businesses. But she urged lawmakers to work toward consensus.
"Whether you are a Democrat, a Republican, or an independent, that's how I hope you approach these conversations: in good faith, with good ideas, with civility, with an open mind and, ultimately with a commitment and the courage to make hard choices," Mills said.
