$27.8M stimulus aid raises divisions

Posted Feb. 22, 2010, at 8:54 p.m.

AUGUSTA, Maine — Republican and Democratic budget writers in Maine are at odds on how to use a $27.8 million cash infusion from the federal government.

U.S. Health and Human Services Secretary Kathleen Sebelius announced Friday that Maine will be getting financial relief under the federal stimulus act to offset the cost of Medicare prescription drug coverage for state residents eligible for Medicare and Medicaid.

The financial break is retroactive to October 2008 and extends for the rest of this year.

“We believe today’s action will help states as they struggle to maintain Medicaid and other budget priorities in these difficult economic times,” Sebelius said.

The new federal money provides the state additional resources to use in addressing the $438 million budget shortfall.

GOP members of the budget writing appropriations committee were quick to say the money should be used to replace the $35 million placeholder Gov. John Baldacci put in his budget in anticipation of additional federal aid.

“There is speculation there will be more, but nothing really solid,” Sen. Richard Rosen, R-Bucksport said. “We are getting mixed message from our friends in Washington.”

Rep. Sawin Millett, R-Waterford, said the Legislature should take this known additional federal aid, and the expected reprojection of state revenues this week, and use only those figures to adjust the budget. He said it would not be wise to depend on action by Congress that may not occur until after the Legislature has adjourned.

“The $35 million placeholder is not a done deal,” he said. “I think we should also be looking at this additional, one-time money, as a way to avoid pushing off costs into the future or other budget gimmicks.”

Millett said he would rather see this money be used to replace such “gimmicks” as pushing payrolls from one budget year to the next than to pay for ongoing programs. He said too much of the governor’s budget proposal uses one-time resources and does not address the ongoing expenses of state government.

“We want to avoid adding to the cliff we know will be out there for the new governor and Legislature to deal with,” Rosen said.

Both Democratic co-chairs of the panel and Finance Commissioner Ryan Low expressed confidence that Congress will act to extend the enhanced Medicaid match rate for another six months.

The extension is part of the House passed “jobs” bill and has been discussed as part of a Senate version being crafted by majority Democrats. It also was included in President Barack Obama’s 2011 budget proposal.

“The governor believes strongly that this will be passed, that the $35 million number is conservative and very reliable,” said Sen. Bill Diamond, D-Windham. “We don’t want to put our budget together on speculation, that’s true. But on the other side of this, what we don’t want to do is make some severe cuts that we don’t have to make.”

He expects the governor is lobbying hard in Washington at the winter meeting the National Governors Association with members of the Obama administration and members of Congress to have the additional aid passed sooner rather than later.

Low said the $35 million figure is “very conservative” and that if the match rate is extended for another six months it could be twice that amount. He said both he and the governor believe the additional federal funds will be appropriated.

Both Rosen and Millett said it will be difficult to “sell” a budget to their caucuses that includes a significant reliance on federal funds not yet voted on by Congress.

“It is not a direction we prefer to go in,” Millett said.

Rep. Emily Cain, D-Orono, refused to speculate on whether using the governor’s placeholder amount would become an issue that divides the committee on party lines. She hopes Congress does act in the next few weeks.

“For me, it is too early to make that determination,” she said. “I understand the argument; I am just withholding judgment on that.”

The Associated Press contributed to this report.

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