(Illustration by Dan Kirchoff)
(Illustration by Dan Kirchoff)
With little fanfare, Gov. Paul LePage dumped his final biennial budget on a state website at about 10:30 p.m. last Friday night. Predictably, the governor’s 2017-18 budget attempts to advance his vision of ultimately eliminating income taxes for wealthy Mainers while slashing food, shelter and health care assistance for the poorest among us. It also effectively cancels a voter-mandated tax on the top 2 percent of earners to fund schools, eliminates 500 state employee positions and repeals the state’s school funding formula without a detailed replacement.

“My final biennial budget proposal, which I submit today for consideration to the Maine Legislature, seeks to protect our future by mitigating the severe damage to our economy that will be caused by two citizen initiatives approved in November,” wrote LePage in his budget briefing. “This budget also protects our state’s most vulnerable people, especially our elderly, who are already struggling to make ends meet.”

And if “our state’s most vulnerable people” are defined as households earning over $200,000 per year, the governor’s not wrong. 

Putting the Screws to the Poor

With one in five Maine children suffering from hunger and the number of Maine children living in extreme poverty spiking 50 percent since the governor was elected in 2011, the LePage administration’s attitude toward impoverished families can be summed up in a Facebook post by Senior Health Advisor David Sorensen on the eve of the budget dump: 

“Keep an eye out for Governor’s final biennial budget proposal to-morrow,” snarked Sorensen. “The welfare lobbyists in Augusta are going to go berserk.”

Gleeful trolling by government employees aside, the latest budget is by far the governor’s most ambitious attempt to shred what’s left of the safety net for Mainers who fall on hard times. 

One initiative would eliminate MaineCare health coverage for low-income single parents earning 40 percent of the federal poverty level (FPL) as well as low-income 19- and 20-year-olds who are currently eligible for the benefit. Prior to LePage’s tenure, a family of three earning 200 percent of FPL, or $40,320 per year, was eligible for MaineCare, but the state has since reduced eligibility to 100 percent of FPL, which is currently $20,160 per year for the same family.

Under the budget proposal, that same family of three would have to earn no more than $8,064 per year to qualify for MaineCare. And currently eligible families who earn more than that but less than the $20,160 per year would also be ineligible for subsidies to purchase private insurance under the ACA because only households who are over 100 percent of FPL can qualify for subsidies. The “Obamacare” law was designed with the expectation that families earning up to 138 percent of FPL would qualify for Medicaid, but since the LePage administration has refused to expand Medicaid, most severely low-income families have virtually no health insurance options.

In his budget brief, the governor said the savings from the MaineCare cuts will be used to eliminate the waiting list for services to people with developmental disabilities. However, according to the low-income advocacy group Maine Equal Justice Partners (MEJP), the two cuts would also leave 5,800 young adults without health care and roughly 20,000 to 40,000 low-income parents uninsured. According to US Census figures, Maine has fallen from 10th to 24th in the country in terms of the percentage of people with health coverage since the governor was elected in 2010.

“We were doing well, and we are ahead in terms of the rate of insured people,” said Robyn Merrill, the executive director of MEJP. “But we’ve really gone backwards. With the roll-out of the Affordable Care Act, while other states were decreasing their numbers of uninsured, we’ve been going in the other direction. And so this proposal in the budget continues to take us backwards.”

The governor’s budget would also reduce the lifetime cap for low-income families receiving the Temporary Assistance for Needy Families (TANF) cash benefit from 60 months to 36 months and eliminate “good cause” exemptions from work requirements for TANF recipients. Currently, parents on TANF can be exempt from fulfilling the requirement to work 20 to 30 hours per week if there is inclement weather, lack of transportation or the lack of child care. The governor’s proposal would do away with all excuses except in the case of domestic violence, which would require recipients to provide proof, such as a medical, law enforcement or court record and sworn witness accounts. 

The budget also would deny TANF and food assistance to anyone who has been convicted of a felony drug offense after August 22, 1996, and it would require that all TANF applicants attend a job-readiness and vocational evaluation and training program before receiving benefits. The governor’s proposal would also deny benefits for a period of three months to any TANF applicant who has quit or lost a job without “good cause” in the 30 days prior to application. The “job quit” penalty would apply to any applicant who voluntarily quits a job, leaves the job unannounced, does not return to the job without “good cause,” or has “been warned about performance or behavior by the employer, continues the objectionable conduct after the warning, and is subsequently terminated.” The “job quit” penalty would apply for the full three months regardless of whether the applicant gets another job. 

The budget would also end TANF benefits for recipients not working 30 hours a week while in school. 

According to Merrill, the proposal will make it “virtually impossible” for low-income parents to go back to school and improve the prospects of their families. In addition, the proposal would bar families who have lost their eligibility for TANF, either as a result of increased earnings or an increase in the number of hours worked, from receiving transitional child care services if they have assets (such as a home) worth over $100,000. It would also limit eligible families from receiving transitional child care services to 18 months after their TANF benefits have been terminated. 

As a result of previous cuts in TANF, there are now more than twice as many children in extreme poverty than the number of children receiving the cash benefit, according to the Maine Children’s Alliance.

Finally, the budget would take the unprecedented step of completely eliminating the General Assistance program, which offers emergency housing and food assistance to people with no other options. MEJP estimates that the move would eliminate assistance for about 10,000 destitute Mainers. “You’re going to be on the street or you’re not going to get the food, shelter or medicine you need,” said Merrill. “That’s why people refer to [GA] as the safety net of last resort. It’s for people really facing crisis.” 

The bottom line, says Merrill, is that all of the proposals will simply push more and more Mainers deeper into the clutches of dire poverty.

“When we’re hearing from people every day who are struggling to make a living and just get by to meet their basic needs, you just wish that there would be some proposals that would offer solutions in the budget,” she said. “Instead we just see proposals that are going to make life harder for people.” 

Layoffs & COLA Freezes for Public Employees

The state budget would also eliminate 500 state jobs, including at least 278 positions in the Department of Health and Human Services, according to the Maine State Employees Association. Last Friday, 26 employees in the Office of Aging and Disability Services (OADS) received layoff notices from the LePage administration, according to MSEA President Ramona Welton. She said that several of the OADS employees are case workers and case managers who work with the elderly and people with disabilities. She added that vacant home visiting nurse positions are also getting axed. There used to be 50 home visiting nurses, but currently there are about 25 house nurses performing a variety of tasks from home checks and education to treatment of patients with tuberculosis. 

“We’re one pandemic away from a serious crisis,” said Welton. “We don’t even need a pandemic. All we need is a good case of flu and things are going to spiral in that area.”

In addition, the budget would freeze pension cost-of-living adjustments (COLAs) of public employees such as state workers and teachers for up to two years. During the height of the recession, the LePage administration also froze pensions in order to balance the budget. However, Welton questioned why pensions are being targeted now, given that the state is running a revenue surplus. 

“The need to freeze the COLA as with the job eliminations is a mechanism to fund the governor’s pet projects of tax decreases for the wealthiest citizens of the state of Maine,” Welton said. “And it’s done on the middle class and on the lower class and on the elimination of services for the most needy citizens here. The governor says he wants to take care of the elderly and the disabled and the veterans, but yet he is eliminating the very positions that serve them.”

The Rich Get Richer

Although the governor doesn’t deliver on his long-term goal of eliminating the income tax, LePage’s budget does substantially reduce taxes for the rich by implementing a flat tax and creatively bypassing the will of the voters who passed a 3-percent surcharge on households earning over $200,000 per year back in November. In 2018, the governor’s plan would reduce the number of income tax brackets from three to two brackets by creating a lower rate of 5.75 and a top rate of 6.15 percent. After two years the plan would drop the top rate even further to create a flat 5.75 percent tax for all income earners in 2020. In reality, the flat tax would actually be 2.75 percent, but the governor simply takes the 3 percent surcharge tax meant for the wealthiest Mainers and applies it to everyone while simultaneously avoiding the higher rate for the top 2 percent of income earners that it was originally meant for.

“This will dramatically improve Maine’s competitive position in the global economy and prevent our job creators and high-wage professionals from fleeing our state,” wrote LePage. 

The governor’s budget would also reduce the top corporate income tax rate from 8.93 percent to 8.33 percent and eliminate the estate tax, which currently applies to inheritances worth over $5.45 million. It would also incrementally increase the tax exemptions on non-military pensions from $10,000 to $35,000 per year. 

At the same time, the governor’s budget would expand the 5.5 percent sales tax to “non-discretionary” items such as amusements and recreation; household services; installation, repair and maintenance services; personal services; and personal property services. Consumers would pay new taxes on admissions to amusement parks, concerts and theaters, as well as skiing and golf. New taxes on household services would include interior home decorating, housekeeping and organizing services, snow removal, lawn care and pest control services. Services at barber shops, hair salons, spas, nail and tanning salons would also be subject to a new tax.

In addition, the governor’s budget increases the lodging tax from 9 percent to 10 percent and revives a proposal, which was rejected last year, to allow municipalities to collect taxes from nonprofit organizations, such as museums and land trusts, worth over $10 million. The plan would also eliminate the homestead tax exemption for people under 65 years of age and expand the exemption to permanent residents over 65 from $15,000 of a home’s assessed value to $20,000. The plan would also tighten restrictions on the ability of landowners to enroll in the Tree Growth program, which exempts land used for commercial wood harvesting. The budget would require parcels in Tree Growth to be at least 25 acres rather than the current 10 acres. 

Finally, the governor’s budget would increase the income tax credit for child and dependent care expenses to 50 percent of the federal credit from the current 25 percent. But the bottom line, according to an analysis by the liberal-leaning Maine Center for Economic Policy (MECEP), is that the budget provides a $23,000 tax cut to the wealthiest one percent of Mainers by cutting more programs and services. 

“Governor LePage makes his priorities crystal clear,” said MECEP Executive Director Garrett Martin in a statement. “His budget contains major tax cuts for Maine’s wealthy and big corporations. He pays for the cuts by stripping resources from Maine students, Maine families, and Maine communities. Nowhere in this document is a plan to move our economy forward, strengthen our workforce, or invest in our rural economies.”

Education Cuts 

“Maine’s public school infrastructure does not reflect our declining student population,” LePage continued. “Education spending has risen by 27 percent over the past 10 years, representing an increase of $480 million. Meanwhile, student enrollment in our schools has decreased by 11 percent, a loss of over 23,000 students despite the addition of public pre-kindergarten programs. Maine already has one of the lowest student-to-teacher ratios in the country, yet we employ 148 superintendents for only 176,000 students.”

The governor’s budget plan would repeal the current state funding formula, known as “Essential Programs and Services,” and replace it with a “new funding model,” but does not  provide any details of the plan. The budget would also implement LePage’s long-term goal of eliminating local control over teacher contracts in favor of establishing a state-wide teacher contract, which would create a minimum salary for all teachers and would make the State of Maine the collective bargaining agent for all school units to negotiate salaries and benefits. 

“This will raise the base salary for teachers in rural Maine and attract qualified teachers to the profession,” wrote Le-Page. “Maine teachers are facing a demographic cliff as baby boomers retire, necessitating a new approach to attracting and compensating Maine teachers.”

The governor’s budget would no longer pay for local administrative costs and would create an $11 million fund to help school districts contract with “regional education service agencies.” It would also appropriate $5 million to incentivize school districts to further consolidate. The budget also allows for an unlimited number of private-managed, publicly funded charter schools in the state. The existing law caps the number of charter schools that may be approved at 10 schools. There are currently nine approved charter schools in Maine. 

The Maine Education Association (MEA) blasted the budget for not applying the 3-percent surcharge on the wealthiest Mainers and directing it to student instruction as the successful Question 2 referendum mandates. It noted that the current budget appropriates nearly the same amount of money as it did in 2008-2009. And in order to have the same purchasing power as it did back then, the organization argues that the state’s contribution would have to increase by about $100 million. Overall, the MEA estimates that the budget would reduce the state’s share to fund education from 47.1 percent to 46.8 percent, even further below the voter-mandated threshold of 55 percent. MEA executive director Rob Walker called the budget a “reckless” plan that would “decimate” public schools.

“The Governor’s proposal completely ignores the will of the voters by changing the language in the law created by Question 2,” wrote Walker in a statement. “Maine people spoke, and their voices shouldn’t be stifled because Governor LePage chooses to ignore the democratic process.”

In the coming weeks, legislative committees will hold hearings on the budget proposals and, with Democrats still controlling one chamber, it remains to be seen how many of the governor’s proposals will actually survive the budget negotiation process. Senate Democratic Leader Troy Jackson (D-Aroostook Cty.) said his caucus is still digesting the 1,000-page budget document.

 “As Senate Democrats, we’re committed to a budget that’s fair to working-class Mainers, seniors and kids,” wrote Jackson in a statement. “Our No. 1 goal must be the creation of good jobs, the lifting of wages and the investments necessary to kick-start an economic recovery that lifts the boats of all Mainers, not just the ones who already own yachts.”