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In a public health crisis, our priorities must be saving lives and protecting people. However, more than a month after the COVID-19 pandemic landed in Maine, many Mainers are worried about the economic consequences that could come next. As Maine’s state treasurer and chairs of the Legislature’s Budget Committee, we know that Maine has the tools to respond quickly and effectively to the next economic downturn. The state just needs flexibility and some support from Congress. The good news is that there are bipartisan proposals in the works that could make all the difference.
It’s been more than a decade since the 2008 recession upended our economy, shuttering businesses, laying off workers and leaving families financially insecure. Over time these wounds have healed as our economy has slowly recovered. But the scars remain for many people, including elected officials like ourselves.
Since the 2008 recession, we’ve worked to strengthen our economy and save for the future. In the Legislature, we’ve made prudent spending decisions and we’ve grown the budget stabilization fund — the Rainy Day Fund — to its highest level ever: over $250 million. We’ve even created a second Rainy Day Fund for MaineCare to be safe. Our goal was to ensure Maine is prepared to weather an economic downturn. And we did all this without raising taxes and by complying with Maine’s legal requirement for a balanced budget every year.
So when the COVID-19 pandemic reached Maine’s doorstep in March, the Legislature and the Mills administration didn’t hesitate to act, anticipating a stark decline in state revenues. Lawmakers passed a strong, bipartisan supplemental budget that focused on the state’s most pressing needs and resources to combat the effects of COVID-19 on Maine people and small businesses. In addition, when we adjourned a month early, we left behind more than $190 million in the General Fund to meet emergency needs and keep state government functioning in the short run. We were prepared for this moment.
For their part, Congress has taken steps to help states address the unprecedented public health and economic crises resulting from the COVID-19 pandemic. Maine has already received $1.25 billion in Coronavirus Relief Funds. The state treasurer has placed the bulk of these funds with Maine-based banks and their insured accounts. Placing these secured funds with these Maine institutions will bring stability to economies in our local communities.
This is a good first step. But states like Maine need Congress to do more, specifically by giving states more flexibility to meet our communities’ needs. The federal law governing these funds is too restrictive. The law mandates that these funds be used only for “necessary expenditures incurred due to the public health emergency.” But what about the collateral damage and financial hardship the virus has caused communities all across the state?
As state lawmakers in a citizen legislature, we are in a unique position to see and understand what this emergency means in our communities. We are the ones on the ground working with constituents and municipalities to respond to this crisis. We call on Congress to remove harmful and unrealistic limitations on financial assistance to states. These efforts are ultimately funded by Maine taxpayers — our constituents — and we’re on the ground in Maine.
This public health emergency has affected our school districts, local police and fire departments, and Maine charities providing food assistance, health care, and housing to people whose incomes have suffered due to the COVID-19 pandemic. And let’s face it, future income and sales tax revenue will decrease dramatically in the coming year. This will have an unprecedented impact on the state’s future General Fund revenue.
Washington needs to allow Maine flexibility to use these initial funds in ways that make sense for Maine. On top of that, Congress needs to pass the bipartisan proposal from Sen. Bob Menendez, D-New Jersey, and Sen. Bill Cassidy, R-Louisiana, to increase assistance and allow these additional funds to make up for decreases in state revenue resulting from this pandemic. The federal government is in a unique position to assist states in replenishing their operating funds.
So long as we continue to trust our doctors and public health data, Maine will emerge from the COVID-19 crisis. Until then, we are committed to making sure Maine’s fiscal house remains in order.
With the necessary flexibility and a boost from Congress, Maine can get through this period of financial instability and insecurity. We’ve done our part to put Maine in a strong financial position. Now, we need Congress to do their part.
Sen. Cathy Breen, D-Falmouth, and Rep. Drew Gattine, D-Westbrook, are co-chairs of the Legislature’s Appropriations and Financial Affairs Committee. Henry Beck is the Maine State Treasurer.