AUGUSTA, Maine — Changes likely are coming to Maine’s Department of Health and Human Services to address an expected budget shortfall, but the scope of those changes has lawmakers guessing.
DHHS Commissioner Mary Mayhew briefed members of the Legislature’s Appropriations Committee on Monday about her department’s expenses and revenues for the first quarter of fiscal year 2012.
From July 1 to Sept. 30, DHHS expenses were supposed to equal about a quarter of the budget. Instead, expenses were closer to 30 percent, a trend that would be unsustainable over the entire fiscal year.
Mayhew was not prepared Monday to offer lawmakers an analysis of why expenses were higher than anticipated or what changes would be needed. When asked she did confirm that her department would present a supplemental budget to the Legislature in January.
“My commitment is to provide [lawmakers] a more comprehensive analysis that gives them a better sense of the potential shortfall and also bring forward any potential changes that we’ll have,” she said in an interview later Monday.
Members of the Appropriations Committee await more information from the commissioner, some with more trepidation than others.
“What I heard [Monday] is: There is going to be a supplemental budget. That tells me there is an issue,” said Rep. Kenneth Fredette, R-Newport. “We don’t know the size of the problem, but I’m guessing it’s going to be somewhere between $50 million and $100 million.”
Rep. John Martin, D-Eagle Lake, however, said Mayhew did not convince him on Monday that the DHHS budget problem necessitates drastic changes.
“They didn’t have to move any money in order to make payroll and meet expenses,” he said. “To me it looks like we may well be within budget at this point going forward.”
Rep. Peggy Rotundo, D-Lewiston, said although DHHS’ expenses and revenues are not equal at the moment, she was cautious about blowing the numbers out of proportion.
“What I heard is: They aren’t clear in terms of what’s happening,” she said. “Months ago, they were saying that an increased number of those receiving services was driving up costs. We looked at figures and realized that wasn’t the case.”
Gov. Paul LePage has said that he believes Maine’s DHHS costs are too high and wants to make sure high administrative costs aren’t getting in the way of delivering services.
The governor pointed to a 2009 study done by the Legislature’s Office of Program Evaluation and Governmental Accountability that showed one narrow area of contracted services — children’s outpatient mental health services — spent 27 cents of every dollar on administrative costs.
“Only 73 cents of every dollar gets to provide a service,” the governor said in August. “I believe it should be 88 or 89 cents.”
The governor even has threatened to eliminate programs altogether.
“We need to look at DHHS more as a safety net and less as a way of life,” he said this summer. “Some programs may just have to go away.”
Rotundo said she’s not opposed to a supplemental DHHS budget, something she called fairly routine, but she worried about cuts to programs that people need.
Fredette countered that economic realities are forcing lawmakers to “right-size” government.
“We need to look at revenues and build government around the concept of matching that,” he said. “Tax increases are not on the table, so we need to look at where we can make adjustments.”
If changes are proposed, the DHHS budget almost certainly will address MaineCare, which has seen a steep increase in the number of claims filed as the economy continues to languish.
But MaineCare, the state’s Medicaid program, is funded largely with federal dollars. The state pays about a third of the cost. That means Maine is limited in its ability to change the program dramatically.
The deadline for DHHS to submit a supplemental budget proposal is the end of the month, but Mayhew said her department would need more time. Any substantial changes in her department would require legislative approval.
Martin said if the governor wants to proceed with some of his proposals, including an estimated $93 million plan to eliminate income taxes on retiree pensions, he doesn’t see how DHHS would be spared.
Rotundo added that she hopes the recent budget concerns at DHHS don’t turn into an excuse for the department to make cuts, particularly if the LePage administration wants in turn to pay for other things.
For this budget, DHHS has been working off baseline budget projections that were inherited from the Baldacci administration and Mayhew said were too low.
“Year after year we keep adding things on without really understanding the impact,” she said. “We need to be asking whether our budget reflects true experiences.”