AUGUSTA, Maine — Republican Gov. Paul LePage and House Minority Leader Kenneth Fredette, R-Newport, said late Monday afternoon that new data show a general fund revenue shortfall of $119 million in the two-year budget that started July 1, 2013, and ends June 30, 2015. The Department of Health and Human Services accounts for the vast majority of the shortfall.
Democrats, who in December asked for departmental budget information to be delivered by Jan. 3, said the information provided by LePage on Monday confirmed a continued pattern of mismanagement within the Department of Health and Human Services. Fredette said the shortfall results from too much spending spearheaded by Democrats, particularly for health and welfare programs.
“The issue here is once you create this entitlement in MaineCare, how do you control costs?” said Fredette. “There are questions of utilization, questions of what the hospitals charge and questions of emergency room usage. … This doesn’t appear to be necessarily a revenue problem. This is a departmental problem.”
Senate Majority Leader Troy Jackson, D-Allagash, criticized LePage for his delay in providing the shortfall information, which he said shed no new light on the reasons for the shortfalls.
“The governor needs to step up and help us solve whatever problems may exist as a result of the mismanagement at DHHS that’s occurred on his watch,” said Jackson in a prepared statement. “Actions speak louder than words, so the question now for Gov. LePage is what is Gov. LePage going to do to fix it?”
The “actions speak louder than words” comment is a dig at LePage, whose re-election campaign has often trumpeted that theme in touting the governor’s accomplishments while downplaying his sometimes controversial outbursts.
LePage spokeswoman Adrienne Bennett wrote in an email to reporters on Monday evening that the actual shortfall is $132 million, but $119 million is needed to balance the budget. That’s because of better-than-anticipated revenue forecasts for the coming year.
The shortfall includes $1.5 million in the Department of Administrative and Financial Services; $3.3 million in the Department of Corrections; $1 million in defense, veterans and emergency management; $3.2 million in the Department of Education; $122.7 million in the Department of Health and Human Services; and $1.1 million in the judicial branch, according to a document provided by Fredette.
House Majority Leader Seth Berry, D-Bowdoinham, highlighted $20 million in federal funding cuts threatened because of problems at Riverview Psychiatric Center in Augusta, $28 million on a MaineCare transportation services contract and almost $1 million for a no-bid contract to a political consultant hired by the LePage administration to study the feasibility of expanding Medicaid in Maine under the federal Affordable Care Act.
It was not clear late Monday to what extent those issues are contributors to the shortfall. Bennett said Finance Chief Sawin Millett would be available Tuesday to answer questions for lawmakers and reporters.
“It’s not a surprise to see a shortfall in the Health and Human Services budget,” said Berry. “Over the past few months, we’ve seen the department struggle to manage its programs well, from meeting federal guidelines at Riverview Psychiatric Center to the MaineCare rides program. We didn’t cause this problem, but we are ready to work with the governor and the department to solve it.”
The amounts identified by LePage don’t include $40 million that the Legislature must find in new tax revenue nor $34 million recommended last year by LePage’s Office of Policy and Management. Both amounts must be found to balance the current biennial budget, and both packages have been criticized by Democrats and Republicans in the Legislature, who will debate them in the coming months.
Fredette said he expects Republicans to insist in budget negotiations that the solution is downsizing government, not finding more revenue.
“At the end of the day, our caucus is really looking to reduce the size of government,” he said. “In my opinion, this is not going to be a session for dealmaking. If that means reductions in revenue sharing, so be it. If it means curtailment, then maybe we see curtailment. We’re not going to be in a mood to try to preserve the status quo to try to take away good programs to continue feeding the hole of Medicaid and revenue sharing.”
Curtailment is a process by which the governor makes cuts at his discretion to balance the budget. During the previous two-year budget, LePage did so in December 2012.
Revenue shortfalls in the middle of budget cycles have become commonplace in recent years, particularly since the financial crisis of 2008. They mean that either revenues expected to state coffers have fallen short or spending in government agencies have exceeded what was budgeted.
LePage has been distancing himself from the biennial budget since last fall, when he told a reporter that he would not submit a supplemental budget package this year because he already laid out his money-saving ideas in the biennial budget. The Legislature made several adjustments to LePage’s budget bill, including blunting his proposal to eliminate municipal revenue sharing, restoring some property tax relief programs, adding more money to fund public schools and giving raises to state employees. To pay for the extra spending, lawmakers temporarily raised the sales tax from 5 percent to 5.5 percent and meals and lodging taxes from 7 percent to 8 percent.
LePage ultimately vetoed the budget bill, raising the possibility of a state shutdown, though Democrats and some Republicans, including Fredette, overrode the veto with a 114-34 vote in the House and a 26-9 vote in the Senate.