November 14, 2019
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Maine’s projected $87 million tax windfall creates small budget ‘cushion’

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Gov. Janet Mills addresses a joint session of the Legislature at the State House in Augusta on Feb. 11, 2019.

AUGUSTA, Maine — Maine is projected to beat revenue projections by $66 million in this budget year and nearly $21 million in the next two years, providing a small cushion to a tight two-year budget proposed by Gov. Janet Mills but not enough to fund many Democratic priorities.

Those figures were presented to the state’s Revenue Forecasting Committee on Wednesday. While they may give lawmakers some money to pay for bills passed this year that require funding, it may not greatly affect negotiations around the $8 billion budget proposed by the Democratic governor, who issued a statement saying the projections affirmed her proposal.

The gains expected in the next three fiscal years are small, only accounting for less than 1 percent of all revenue expected during that time. But they are important to budget discussions because Mills’ proposal as originally drafted would have spent all but $384,000 of projected revenue and the passage of a supplemental budget in March put it $5 million in the negative.

Mills pledged in her 2018 campaign not to raise taxes in her first budget, which put her at odds with some progressives who want to undo tax cuts enshrined under former Republican Gov. Paul LePage and meet long-unmet statutory obligations to fund 55 percent of essential K-12 education costs and give 5 percent of state tax revenues to cities and towns.

The governor’s budget would increase funding for both of those programs, but it still would fall $200 million short of the K-12 benchmark and would fund municipal revenue sharing at 3 percent. Since Mills unveiled her two-year spending plan in February, Democratic-led legislative panels have recommended full funding of those programs.

However, the money to do it won’t be there without tax hikes. Legislative Republicans have warned that the governor’s tight budget — combined with spending proposals endorsed by the Legislature — could require tax increases later.

In a Wednesday statement, Mills said should the projections showed that lawmakers should support the “important priorities” in her budget “while ensuring that we appropriately and responsibly balance the need for investment with the need to save for the future.”

Sen. Cathy Breen, D-Falmouth, the co-chair of the budget committee, said she had no specific plan for what lawmakers should do with the extra money, but she said it “gives us an opportunity to have a better cushion” around the budget and “continue to prioritize.”

Senate Republicans on Wednesday urged Mills to use existing funds to pay for road projects that have been delayed because of sharp bid increases, with Majority Leader Dana Dow, R-Waldoboro, saying in a statement the two-year budget “still needs to be reduced.”

The budget committee will be tasked with crafting a budget that requires two-thirds approval in both legislative chambers. Members have only just begun that work and have voted routine items into their package while leaving items providing for new staffing or positions tabled.

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