Gov. Janet Mills has released an $8 billion two-year budget that increases funding for education and property tax relief, but does not reverse any of former Gov. Paul LePage’s tax cuts for the wealthiest Mainers. The plan also fails to fully fund revenue sharing to municipalities.

The spending proposal provides an additional $126 million to K-12 education, but falls short of funding schools at the statutorily mandated 55-percent level and does not reinstate the voter-mandated 3-percent surtax on the top 2 percent of taxpayers to fund education that the Legislature repealed in 2017.

In her budget summary, Mills wrote that her plan addresses the most serious challenges facing the state, including lack of affordable health care coverage, inadequate school funding, the opioid epidemic, the workforce shortage and crumbling infrastructure, without raising taxes.

“In releasing this budget, there will be those who say this is government spending run amok and, to the other side, there will be those who say that state government must spend more, more, more,” she wrote. “I respectfully disagree. This budget lays out a responsible path to rebuilding state government so that government responds to Maine people.”

The proposal raises spending by 11 percent over the current $7.3 billion budget and relies on projected increases in revenues to balance it without raising taxes.

The budget blueprint raises the state’s share of education funding to 50.71 percent and raises municipal revenue sharing from 2 percent to 2.5 percent the first year and 3 percent the second year. By law, revenue sharing is scheduled to automatically increase to its original 5-percent level starting in July, but the Mills plan reduces it to three-fifths of its statutory level. The Legislature slashed revenue sharing during the recession, which has amounted to about $700 million in lost revenue that could have used it to pay for municipal services and property tax relief, according to the Maine Municipal Association.

The Mills plan also allocates $146 million for Medicaid expansion and $5.5 million for drug overdose prevention, drug use prevention education and to support recovery initiatives. It also provides an additional $10 million for tobacco and nicotine use prevention efforts aimed at teens and young adults. The plan would raise the minimum public school teacher salary from $30,000 to $40,000 a year. Mills’ budget provides increased funding for a Washington County Pre-Release Center, county jails, 15 new state troopers and sergeants, a dozen public health nurses and new positions in the computer crimes task forces and the Attorney General’s office to investigate elder financial abuse.

Democrats in the Legislature were typically measured in their response. In a statement, Senate President Troy Jackson (D-Aroostook Cty.) said Mills’ budget proposal “marks the start of a long but important process.”

“In the Senate, we’ve committed to working to lower property taxes, improve health care — cost, quality and accessibility — and invest in fair, good-paying jobs, education and workforce development,” he said. “All of these issues have been at the forefront of our agenda for the better part of the past decade and we will continue to fight for policies that bring us closer to our goal.”



 




House Speaker Sara Gideon (D-Freeport) said in a statment that her caucus will remain focused on supporting education investments, increasing access to affordable health care, making investments in broadband infrastructure and lowering property taxes.

“The legislative branch will continue to work closely with the governor to fulfill these obligations to our people, and I look forward to the end result of a productive and dynamic budget that works for all Mainers,” Gideon said.

Senate and House Republicans issued a statement calling the budget blueprint “unsustainable.” Republicans noted that the proposal increases spending over the last budget, although Gov. LePage also increased the budget over the years. They also pointed out that the projected revenue figures rely on the state’s Consensus Economic Forecasting Committee report, which was finished before the stock market took a tumble in December. A future economic downturn, they argue, could result in massive revenue shortfalls.

“Republicans believe we shouldn’t be spending more than we take in,” the statement read. “We are seeking a seat at the table where, in good faith, and with civility, we can help bring the overall budget number down to a level that will not result in tax increases at the local or state levels or adversely impact Maine’s strong economy.”

The liberal-leaning Maine Center for Economic Policy (MECEP) praised Mills for her support for Medicaid expansion, but criticized the proposal for failing to reverse LePage’s income tax cuts for the wealthy. Last year, MECEP and the Institute on Taxation and Economic Policy (ITEP) released a report that found that tax cuts passed during the LePage administration will cost the state $864 million in revenue this biennium. About half of the tax breaks went to the top 20 percent of earners while the bottom 20 percent received less than 5 percent of the benefit, the analysis found.

Under Maine’s current tax code, households earning annual incomes of between $35,800 and $56,100 pay 9.6 percent, those earning between $56,100 and $91,000 pay 9.4 percent, and families earning between $91,000 and $185,500 pay 9.9 percent of their incomes to state and local taxes. Meanwhile, the top 1 percent, those earning over $434,500 a year, pay just 8.6 percent, according to ITEP.

“By maintaining LePage-era tax cuts, this budget does not provide the necessary resources to fully fund education and local services,” said Garrett Martin, MECEP’s executive director, in a statement. “As budget negotiations unfold in the coming weeks, MECEP will continue to advocate for a real, practical conversation on how to address the revenue challenges created during the LePage years so we can finally make real investments in good schools, good jobs, healthy families and thriving communities.”

Both Rep. Jeff Evangelos (U-Friendship) and Rep. Pluecker (U-Pluecker) also criticized the Mills budget for not making the tax code fairer for middle income earners.

“The biggest disappointment...was [Mills’] George Bush Sr. imitation, ‘no new taxes,’” wrote Evangelos in an email, adding, “The days of Mom and Pop on fixed incomes paying higher property taxes while the wealthy enjoy lower income taxes must come to an end. Poor and middle income people should not be subsidizing Daddy Warbucks.”