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The state of Maine could need at least $3 billion to make up for the revenue it expects to lose from the coronavirus pandemic and to cover the costs of fighting it, according to estimates released by Democratic Gov. Janet Mills’ office as the state advocates for more federal aid.
And that estimate is low, the governor wrote in a letter to members of Maine’s congressional delegation.
The list of effects from the pandemic includes a projected $725 million loss in state revenues through next June and $125 million in lost highway fund revenues through next September. The $725 million figure is unlikely to encompass the full scale of the pandemic’s effects, Mills noted in the May 14 letter. Rather, it’s a figure the state has used to account for a severe, yet conventional recession.
Although the expenses related to COVID-19 for personal protective equipment, cleaning, testing and other services are “significant,” Mills said they will “pale in comparison to the impacts for loss of state revenues and increases in state costs of countercyclical programs like Medicaid.”
The list of expenses includes estimates of what it could take to combat the virus in terms of additional testing, reconfiguring the state’s primary education system and providing unemployment benefits. The combined revenue losses and costs of adapting to the pandemic add up to more than double the funding Maine has received so far under the $2.2 trillion CARES Act.
Estimates include $325 million in costs for staffing the unemployment benefits system and providing an average of $22 million per week in payouts for 16 weeks; $14 million to reconfigure the state’s judicial system and expedite electronic filing; and $28 million in overtime, hazard pay and public safety costs. It also includes the $1.2 million expanded testing partnership with IDEXX.
The list of cost estimates does not include the costs related to covering the state’s uninsured or increased need for state assistance programs. The Mills administration said it was still developing those estimates.
Without federal aid, Mills wrote, a $725 million loss in revenue would require budget reductions of more than 17 percent across state government.
Some of the losses to state and local governments are already visible. Mills pointed specifically in the letter to the Department of Transportation, which could lose $125 million in revenue over the next 18 months as fuel tax revenue drops as a result of decreased traffic. She also said municipalities have had to renegotiate their contracts for solid waste and recycling at substantially higher costs, resulting in $90 million more in costs collectively.
The $1.25 billion Maine expects to receive under the CARES Act is supposed to be used only to cover the costs of responding to the pandemic. It provides no wiggle room for the state or local governments to offset revenue shortfalls, and no Maine cities are large enough to qualify for other federal dollars.
A U.S. Senate bill co-sponsored by Maine Sen. Susan Collins, a Republican, could provide at least $2 billion in aid to state and local governments and more flexibility for CARES Act money. It’s an alternative to the $3 trillion bill put forward by House Democrats, support for which was split among Maine’s House representatives.
Watch: What will it take for COVID-19 to go away?