Gov. Janet Mills waves at a passing vehicle that beeped during a press conference Thursday at General Insulation in Brewer on Nov. 4, 2021. Credit: Linda Coan O'Kresik / BDN

AUGUSTA, Maine — A huge budget surplus will be a centerpiece of fraught 2022 election-year politics in Maine, with Democrats coy about their priorities but Gov. Janet Mills signaling a desire to negotiate with Republicans who are eyeing a substantial refund to taxpayers.

State revenue forecasters on Tuesday projected that Maine would collect $822 million more than initially expected during the current two-year budget cycle ending in mid-2023, an increase of nearly 10 percent. That comes after doomsday revenue projections from the early COVID-19 pandemic were wiped away by trillions of dollars in federal aid that boosted state coffers.

Mills said Tuesday that she will submit a short-term budget proposal “in the coming weeks” to use much of the new money, adding that she wants “provide direct financial relief” to Mainers hit by price increases. The Legislature will consider it when it returns to Augusta in January.

It could align with Republican proposals to send much of the surplus back to taxpayers, but consensus has been hard to reach of late in Augusta. It may be even harder with Mills on the ballot in 2022 in a showdown with former Republican Gov. Paul LePage and every legislative seat up for grabs. Parties will joust for credit over the end result.

Rep. Sawin Millett, R-Waterford, a former finance commissioner under LePage and a leading member of the budget panel, said he was heartened by Mills’ support for returning money to Mainers. He is hoping for a one-time giveback of approximately $400 million, and other Republicans said they generally do not want to put money into new programs.

“I would prefer to see the money put into categories that would benefit consumers, benefit Maine people, benefit the people that are struggling to pay the bills, to heat their homes this winter and fill up their automobiles,” he said.

Lawmakers have had lots to spend in the past year, with Democrats passing a $983 million federal aid package focused on infrastructure, broadband and short-term aid to businesses in July. They passed both that and a two-year budget in March over Republican objections, though the minority party acceded to a revised $8.5 billion budget in June after winning $150 million for refund checks of nearly $300 for Mainers who worked through the pandemic.

That could provide a roadmap for a larger refund in 2022. The end of this year has been marked by high inflation and rising commodity prices. U.S. consumers saw the biggest jump since 1990 in the cost of essentials this October, when prices rose by 6.2 percent relative to a year earlier.

Mills’ office and her fellow Democrats in the Legislature did not elaborate much on their plans on Wednesday. She wants to focus on financial relief and is “open to ideas from both Republicans and Democrats” on that topic, said spokesperson Lindsay Crete.

Lawmakers may have more ideas on spending: Some in both parties have indicated interest in increasing funding to nursing homes that have struggled during the pandemic, and the state’s child welfare system is the subject of fresh public scrutiny and several bill proposals after several recent child deaths and criticism from the program’s watchdog.

Rep. Teresa Pierce, D-Falmouth, a co-chair of the budget committee, cited workforce training, home heating aid and an affordable housing crunch as topics the Legislature should address.

“I am focused on prudent investments in Maine people and strong fiscal responsibility because I know that’s how we put our state in this position in the first place — and we’re not in the clear yet,” she said in a statement.

Republicans have criticized Mills’ spending levels since she proposed her first two-year budget at roughly $8 billion, and they are giving her little credit for the federal aid bolstering the state. But the rainy day fund — a key priority for LePage during his tenure — stands at a record $492 million.

The rosy projections signal no immediate fiscal calamity and provide a luxury to fight over. While Republicans’ main priority is to return much of it to Mainers, some have other agenda items. That includes Assistant Senate Minority Leader Matt Pouliot of Augusta, who wants to spend between $50 million and $60 million to expand a tax credit for workers with student loans.

“I mean, we could use a fraction of that to help relieve debt for tens of thousands of Mainers,” he said of the total surplus.

Michael Shepherd

Michael Shepherd joined the Bangor Daily News in 2015 after three years as a reporter at the Kennebec Journal. A Hallowell native who now lives in Augusta, he graduated from the University of Maine in...