When Gov. Mills released her biennial budget proposal last month, she commendably made good on her campaign promise not to raise taxes in her first budget. Unfortunately, overall spending levels in the proposal are too high to be sustained, particularly given the possibility of a recession, which could lead to tax increases and extensive use of the Budget Stabilization Fund.
Gov. Mills herself acknowledged the possibility of a recession in her inaugural address, yet she has irresponsibly proposed spending more than $8 billion over the next two years, an 11 percent increase over current spending. The plan leaves just $383,355 for cushion if revenue projections fail to materialize, the cost of running government exceeds initial estimates or Maine experiences an economic downturn.
Even when you include the amount in our Budget Stabilization Fund (about $273 million), there may not be enough money left over to protect Maine taxpayers. We know this to be true because of the stress test included in the Governor’s Budget Overview, which found that a moderate recession would leave Maine facing a $237 million shortfall by 2021, and a severe recession would set us back $400 million to $525 million by 2023.
Outside of overall spending, there are two primary concerns with this budget. The funds we’ve allocated for some programs may not be enough to cover the full costs, and some of the priorities advanced by Gov. Mills contradict each other, making hollow the claims of property tax reductions.
Medicaid expansion, for example, sees an appropriation of $146.7 million in this budget, but evidence from other states that have expanded Medicaid shows this may not be enough to cover costs. A 2018 Foundation for Government Accountability study shows that, on average, expansion states experience a 92 percent cost overrun. If the same scenario plays out in Maine, we may need an additional $134 million to cover the full costs of expansion.
Maine is on track to reach the projected 70,000 enrollees by April 2020. We’ve been adding new enrollees at a clip of 1,120 per week since Gov. Mills signed her first executive order, which expanded Medicaid.
Other than the potential for cost overruns, what makes expansion troubling is who we are leaving behind. Medicaid expansion provides new coverage for childless, able-bodied adults, but meanwhile, thousands of Mainers languish on waitlists.
According to the Maine Department of Health and Human Services, 1,598 Mainers with intellectual and developmental disabilities sit idle for services under Section 21, and about 2,430 total Mainers are on waitlists for existing Medicaid and state-funded programs. These individuals are our state’s truly needy and should be the top priority. Gov. Mills’ budget adds only 300 new slots for Section 21 services.
In addition, the governor’s push to reduce property taxes by increasing revenue sharing and state funding for education amounts to empty political rhetoric. As we’ve highlighted in the past, Maine’s revenue sharing program has historically failed to reduce the property tax burden incurred by our citizens.
The governor has also proposed mandating a minimum public teacher salary of $40,000 and has pledged an additional $324 million for the Department of Education. However, the department’s new commissioner, Pender Makin, made clear in recent public testimony that the state’s plan is to phase in local responsibility for this mandate. Gov. Mills’ proposal may cover the costs in this biennium, but it won’t be long until local property taxpayers are saddled with this burden.
If the governor truly wanted to reduce taxes and make it easier to live in Maine, she would have proposed spending at levels that fall in line with the rate of inflation or personal income growth while returning surplus and projected revenues directly to taxpayers in the form of tax reductions. Instead, she has elected to grow state spending to its highest levels in history.
Lawmakers have only just begun to unpack this proposal, and there are likely many conversations ahead before the budget is finalized. But if the governor wants to reduce property taxes, or even extend her promise of no tax increases into the next biennium, she’ll need lawmakers to cut the fat from this proposal.
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