" “What’s scary to me is that since January both the governor and House Republicans have been threatening a state shutdown.” – House Majority Leader Erin Herbig (D-Belfast) "

Gov. Paul LePage says he’s preparing for a partial state government shutdown due to the unwillingness of Democrats and Senate Republicans to meet his budget demands.

Under the Maine Constitution, two-thirds of the Legislature must pass a budget by June 30 or the state must close offices and lay off all but the state employees that the governor deems “essential.”

“I’m having a cabinet meeting at 8:30 and we’re going to start preparing,” LePage said in a radio appearance Tuesday. “We’re going to ask the commissioners to take a look at what are the most vital services that are being provided in each agency and what we have to do, and we’re having the lawyers look into what needs to happen in case they can’t come to an agreement.”

For several weeks, Democratic and Republican lawmakers have been in intense negotiations, but have failed to come to an agreement over education funding. So far, both the 13-member bipartisan Appropriations Committee and a special six-member committee of conference have been unable to reach a compromise.

The latter committee was formed with great fanfare last week, but by Thursday it had postponed meetings until further notice. The legislative session was scheduled to end on Wednesday, but as a result of the stalemate, the House and Senate voted this week to extend the session for another five days; 31 House members voted “no.”

Meanwhile, Democrats and Senate Republicans are within $25 million of striking a deal. But they still need House Republicans on board, and they won’t approve a deal without some of the governor’s proposed education reform policies.

Surtax Likely to Be Sacrificed at the Budget Altar

In the beginning of the negotiations, Democrats said that their priority was to uphold the voter-mandated 3-percent surtax on the portion of annual household income that exceeds $200,000. The new tax, which became law after voters approved it in November, is projected to bring in $320 million to cover the state’s obligation to fund 55 percent of the cost of K-12 education. Without the funding, most towns have to raise the money through property taxes.

But Democrats have since softened their stance because the final budget needs a two-thirds vote, and Republicans have demanded nothing less than the full repeal of the surtax.

“We want to include an aspect of the surcharge, but right out of the gate we were realistic that we weren’t going to be able to keep it fully intact,” said House Majority Leader Erin Herbig (D-Belfast). “While the voters may have passed Question 2, they did not elect a membership to fully defend all of these referendums.”

In their latest proposal, Democratic leaders have offered to reduce the surtax and raise some sales taxes to bring in $200 million.

On the other side of the table, Senate Republicans have moved from their initial offering of $100 million in school funding to $110 million along with $65 million for “property tax relief” programs, which they say will be paid for from existing revenue sources rather than tax increases.

In a Monday radio appearance, Senate President Mike Thibodeau (R-Waldo Cty.) said he will continue to demand the repeal of the “devastating” surtax, but will try to uphold the will of the voters to fully fund the cost of education.

“I fully expect [the surtax] to get repealed, and we’re going to pass a budget that, as I’ve said since November, is going to honor the spirit of what the voters passed without doing the damage to Maine’s economy,” he said. “And what that means is we’re going to have the largest investment in K-12 education in our state’s history, and we’re going to do it with existing resources.”

Herbig said that while her caucus would like to keep some part of the progressive surtax, its two biggest priorities are to lower property taxes and meet the voter-mandated 55-percent law. Democrats say they have the will of the voters on their side, as well as a 2013 state-commissioned study by California-based research firm Lawrence O. Picus and Associates that concluded that while Maine’s school funding formula itself is relatively equitable it is underfunded.

The firm recommended that the state increase education funding by $327 million per year to target the needs of struggling students, reduce elementary-school class sizes, fund pre-kindergarten for every district, provide additional teacher training, and relieve the property tax burden. But there wasn’t an appetite to pass such a politically risky proposal and the report was shelved, so the Maine Education Association took it to the ballot box.

LePage & House Republicans

But while Democrats and Senate Republicans appear to be very close to a deal, they won’t move until they know they have House Republicans on board. And House Republicans are sticking by Gov. LePage’s original budget proposals, which were voted down in committee months ago.

In separate radio appearances this week, Gov. LePage and House Minority Leader Ken Fredette (R-Newport) said they won’t support either budget until it contains LePage’s controversial proposal to create a pilot project for a statewide teacher contract, which Democrats oppose (see House Votes Down Statewide Teacher Contract Proposal).

“We support our teachers and we support our kids in our schools, but when you’re talking about those kinds of dollars, it’s a big deal. We want to focus on solving the problem, not just throw money at it and maintain the status quo,” Fredette said on WVOM radio Wednesday.

Fredette argued that a statewide teacher contract would help reduce the pay gap between teachers in poorer towns and teachers in wealthier towns with higher property values that therefore can pay their teachers more.

In addition, the governor said Monday that he is also asking for the budget to include a reform of the tree growth property tax exemption, as well as a mechanism to allow towns to tax land trusts, both of which have been rejected multiple times by the Legislature.

Rep. Paula Sutton (R-Warren), who was the only local Republican lawmaker to respond to a request for comment, said one of the main sticking points is that the House Republican biennial budget plan is $6.89 billion, while the Democratic and Senate Republican proposals go over $7 billion. She said that she also opposes funding public assistance.

“My hope [is] we can come to an agreement on a commonsense budget that continues to move Maine forward in a fiscally responsible way,” she wrote. “My fear is that the 54 House Democrats who signed a pledge vowing to shut down state government if the 3-percent surcharge is repealed will make good on their promise.”

In fact, the letter — which included signatures from midcoast Representatives Pinny Beebe-Center (D-Rockland), John Spear (D-So. Thomaston), Walter Kumiega (D-Deer Isle), Stanley Paige Zeigler (D-Montville) and Mick Devin (D-Newcastle) — does not vow to shut down the government if Question 2 is repealed, but pledges to “only support a budget that has a progressive and sustainable funding source to reach 55 percent of the cost of our kids’ education as called for by Maine voters.”

Not surprisingly, Democrats have their own version of who is to blame if there's a shut down.

“We’re just waiting for [House Republicans] to come to us with something reasonable and a step in the right direction like everyone else,” said Herbig. “Unfortunately, when we asked them for a plan, they involved the governor. In my experience of seven years in the Legislature, involving the governor has never been helpful. What’s scary to me is that since January both the governor and House Republicans have been threatening a state shutdown.”

And If There’s a Shutdown?

There hasn’t been a partial state shutdown since 1991, when Democrats and Republican Gov. John McKernan failed to reach an agreement over a Republican plan to tie the biennial budget’s $300 million tax increases with a workers’ comp reform package. At the time, 10,000 state workers were laid off and 2,000 employees — including state troopers, prison guards, and mental hospital workers — were deemed “essential” and stayed on the job.

According to news reports from the time, low-income Mainers hit a near crisis when the Department of Health and Human Services temporarily couldn’t process welfare, food stamps and Medicaid. Despite a court order to hire caseworkers to process claims, the Bangor Daily News reported that a 21⁄2-year-old boy with leukemia couldn’t get a preliminary bone marrow screening in Boston until Maine approved the parents’ Medicaid application, which was held up in the shuffle. The Ellsworth American reported that a child was left without his psychotropic medication because his caseworker had left it on her desk when the state shut down. With fewer child-protective caseworkers on the job, police were picking up children from crisis situations and reportedly dropping them off into foster custody with little information about the children or the custodians. District courts closed temporarily as dockets piled up and sentences were delayed.

It was the busy season for road repairs, but 150 DOT inspectors were pulled off 100 major construction sites, idling 1,500 to 2,000 workers. State parks were also closed and routine maintenance was neglected at rest stops. Tourists who stopped at a rest stop on I-95 were greeted by piles of trash blowing across the parking lot and an overflowing toilet that flooded the bathroom in excrement with used diapers and condoms strewn about.

One day a 65-year-old Massachusetts man died of a heart attack before the EMTs could arrive at Popham Beach, which some blamed on the lack of lifeguards on duty.

With the Department of Motor Vehicles shut down, no one could renew their licenses or register their cars. Mobile homes and heavy equipment couldn’t be hauled since special state road permits were needed. Activists set up an encampment in Capitol Park and hundreds of protestors swarmed the halls of the State House. Some legislators walked the halls of the State House wearing pins that said, “The Session from Hell.” Legislators took a fair amount of abuse from motorists and many removed their legislative plates so they wouldn’t stand out.

Main Difference Between 1991 State Shutdown & 2017: There Is No Recession or Budget Crisis

But the main difference between 1991 and 2017 is that there is no recession or budget crisis. In fact, there’s actually a budget surplus. But given that the governor has vetoed every budget since 2013, it’s unlikely that he will sign this one.

“The attempt is going to be to run the clock out, give me a budget and say we dare you to veto it,” said LePage on Tuesday on WVOM. “Well, I’m gonna tell you something, if it hurts Maine, I’m going to veto it. I don’t care if it’s the 11th hour, the 10th hour or tomorrow morning. If it is the wrong thing for Maine, I’m going to veto it.”