Governor’s budget proposal has wide-ranging impact on education, health services

AUGUSTA, Maine — A supplemental budget presented this week by Gov. Paul LePage includes a number of spending cuts but also features new spending initiatives and tax breaks.

Beyond the numbers on the page, though, the budget bill is a policy document that allows the governor to move forward with initiatives that are a priority for the administration but aren’t really related to the 2012-13 budget.

A wide range of policy proposals are contained in the budget but do not have dollar amounts attached because they wouldn’t go into affect until 2014. That means those initiatives would have to be addressed in the next biennial budget.

Democrats in the Legislature were wary about passing policy initiatives with no plan for how they would be funded.

“In the final weeks of legislative work, we are being asked to make major policy changes, not just a typical budget correction to balance the books,” said Rep. Peggy Rotundo, D-Lewiston, the lead House Democrat on the Appropriations committee. “While the administration is increasing new spending by tens of millions of dollars, we are being asked to make terrible cuts that will impact our students, cities and towns.”

This tactic of including sometimes-controversial elements in a budget bill has been used by many governors for one simple reason: that’s the easiest way to get them passed.

Democrats in the Legislature are criticizing the governor for pushing tax breaks and incentives without clearly spelling out how they will be paid for, but former Gov. John Baldacci, a Democrat, did this as well.

Republicans were not surprised by the details of the budget and seemed to be supportive, at least initially.

“The governor’s proposal deals with cuts in federal funds to psychiatric hospitals, provides funding to at-risk students and funds the new revenue shortfall,” said Sen. Richard Rosen, R-Bucksport, co-chair of the Appropriations Committee.

The Legislature’s budget-writing committee heard more details Wednesday about LePage’s supplemental budget proposal, including its expected impact on education, clean elections and health services.

The estimated $37 million budget addresses a revenue shortfall of $13 million, but the numbers don’t tell the whole story because of the possible implications on the next biennial budget.

Mike Allen and Jerome Gerrard from Maine Revenue Services addressed Appropriations Committee questions about the governor’s tax-related proposals, including a plan to exempt pensions from income tax and a exemption for active duty military pay.

There are additional sales tax exemptions proposed on wood harvesting equipment and hospital respirators.

Democrats balked at those proposals as well.

“Most Maine families and businesses don’t buy what they can’t afford,” said Rep. Seth Berry, the lead Democrat on the Taxation Committee. “The M.O. of this governor and Republicans is clear: Enact future tax breaks now, take credit for them, and then let others make the tough choices to pay for them later.”

Department of Health and Human Services Commissioner Mary Mayhew answered questions as well on Wednesday, mostly about cuts to Dorothea Dix Psychiatric Hospital in Bangor and to the state’s general assistance program.

Part R of the budget asks for a number of changes to general assistance, an emergency program offered by municipalities to struggling families.

First, the proposal would make individuals who receive Temporary Assistance for Needy Families ineligible for general assistance. Next, it would restrict housing assistance in the general assistance program to no more than 90 days per calendar year. Finally, it would reduce the reimbursement rate to towns for allowable expenditures to 50 percent for all municipalities with the exception of Indian tribes.

The last piece would disproportionately affect cities such as Bangor, Portland and Lewiston, which shoulder the biggest general assistance burden. Currently, those communities are reimbursed at 90 percent by the state once a certain threshold is reached.

Another piece related to public assistance is Part S, which “eliminates the requirement that the Department of Health and Human Services provide limited transitional food benefits to ASPIRE-TANF program recipients who lose TANF eligibility due to employment earnings,” and “authorizes the Department of Health and Human Services to provide transitional food benefits to working families who are food supplement recipients in order to help promote economic self-support.”

There is no dollar amount associated with that piece, but it represents a policy shift consistent with the governor’s position on welfare.

Many groups already are lining up in opposition to some of the proposed cuts, including a $1.8-million cut to the University of Maine system and a $544,000 cut to the Maine Community College System.

Additionally, approximately $4.4 million would be moved from the Fund for Healthy Maine to the General Fund and $7 million in general purpose aid to schools and $2.5 million from the state’s Clean Elections funds would also be shifted to the General Fund to help pay for other things.

The budget also eliminates all public funding for the Maine Public Broadcasting Network, totaling $1.7 million.

On the other side, the budget includes the addition of an ombudsman position within the attorney general’s office that would assist with compliance of the Freedom of Access Act and additional money for the legal defense fund and for court security.

Roughly $6 million in savings were achieved by department heads who were asked to further tighten their budgets.

Public hearings on the budget bill are scheduled for Monday, Tuesday and Wednesday of next week.