AUGUSTA — Health and medical services for 300,000 Mainers would be preserved and the state would pay down a major portion of its debt to hospitals if the Legislature approves a budget revision unveiled Wednesday by Gov. Paul LePage.
“It’s a fiscally responsible budget” with no “gimmicks or tricks,” LePage said at a State House news conference.
Besides solving cash flow problems at Maine hospitals, it avoids a potential insolvency crisis in MaineCare, LePage said. In addition, the spending package for the fiscal year ending June 30 conforms the state tax code with federal law in several areas.
Through a state appropriation of nearly $70 million, Maine will be able to access enough federal matching money to reduce a nearly $400 million debt owed to hospitals for Medicaid services by $248 million.
“While we’re not paying all of it, we’re paying as much as we can afford to pay right now, and I believe it’s a good start,” said LePage, who campaigned on a promise to reduce the hospital debt. The governor said financial uncertainty created by the debt caused a loss of 600 hospital jobs, and he hopes they can be restored through his budget provision.
Bruce Sandstrom, chief financial officer for The Aroostook Medical Center in Presque Isle, said the $248 million payback proposal represents “an extraordinary accomplishment.”
“This will definitely help to put hospitals in the strongest position they’ve been in in quite some time,” Sandstrom said.
In addition, the budget accounts for increased enrollments in MaineCare, the state’s Medicaid program, and draws sufficient federal funding to sustain payments to 4,000 providers who offer services to 300,000 MaineCare recipients, the governor said.
While the budget itself doesn’t eliminate jobs, it identifies 250 state positions that have been vacant for at least a year so cuts can be considered in the next budget, said Sawin Millett, LePage’s designee for finance commissioner.
The budget, which was posted online Wednesday and will be taken up by the Legislature in the next few weeks, calls for federal-state tax conformity in several areas.
The changes are needed because Maine income tax forms were printed before Congress extended some tax cuts in December. Without the changes, Maine tax forms would have to be reprinted. Conformity will cost the state $4.5 million in less taxes paid, “but the good news is we’re putting that money in Maine people’s pockets, where it belongs,” LePage said.
The budget will need Democratic votes in the Republican-majority Legislature, and both parties expressed willingness to work together to pass it. It seeks to add $151 million to the current $5.5 billion, two-year budget. Money to pay for the changes comes from improving tax revenues, savings initiatives and spending curtail-ments.
House Minority Leader Emily Cain, D-Orono, called it “a typical supplemental budget” that addresses technical matters and keeps the budget in balance without big policy changes. Any major policy shifts likely would be reflected in a budget still being formulated for the two-year period that will start July 1.
Cain, who was chairwoman of the budget-reviewing Appropriations Committee last session, played down the hospital debt repayment proposal, noting that past budgets also have provided for repayments but at a slower pace.
“You’ll see a lot of questions, a lot of pushing into the details, but a lot of that will be good prep for what comes in the biennial budget,” said Cain.