Janet Mills delivers her State of the Budget speech on February 23, 2021. Credit: Screenshot

AUGUSTA, Maine — Gov. Janet Mills proposed borrowing at least $111 million to aid Maine’s pandemic recovery in a virtual State of the Budget address on Tuesday as she pushed back against calls to cut or bolster services in the next two-year budget.

Top-ticket items in the Democratic governor’s “Back to Work” package include $50 million to help heritage Maine industries like farming, fishing and forestry modernize and increase production. She would borrow $30 million for broadband expansion, $25 million for career training programs and another $6 million to help childcare facilities build, renovate or expand. The governor said more borrowing will be floated, including on transportation and energy.

It was a prelude to what could be a complicated fight for resources in Augusta this year. The governor has proposed a $8.4 billion two-year budget that mostly keeps spending flat while looking to address a $650 million revenue shortfall through 2023.

Mills has bucked progressive desires to raise taxes or spending while Republican lawmakers argue for cuts to this budget relative to the governor’s proposal, which remains roughly $400 million above the last budget passed in 2019.

“Recovery, getting back in shape, is not immediate, its course not always predictable,” she said in a speech recorded Monday. “This budget, though, provides basic continuity, consistency and stability, something our state needs at this time. It is focused on recovery.”

Revenues are up in Maine and most other states relative to dismal projections that came early in the pandemic, with no new projections due until spring. Nearly a year after the state’s first coronavirus case, the number of daily cases has dropped precipitously in recent weeks and 15 percent of Mainers — nearly 203,000 people — have gotten their first vaccine doses.

The bond proposal is an acknowledgement of recovery on the horizon, but it is sure to prompt debate in Augusta. Legislative Republicans blocked three out of four bonds backed by Mills in 2019. While some have been outspoken about the need to invest in broadband, they may be frustrated by the large bond proposal as they call for more permanent cuts to the state budget.

Mills also made a point to highlight Central Maine Power’s controversial $1 billion corridor, which she backs amid lawsuits and a referendum set for the 2021 ballot that complicate the project’s future. She said the state would provide internships for local employers in Franklin and Somerset counties paid for by the utility and noted broadband money attached to the project.

Although the Legislature has yet to pass legislation under virus protocols, spending amendments are in the works and lawmakers have submitted dozens of bills asking for bonds for everything from training more workers to investing in railroad infrastructure. Advocacy groups are frustrated by cuts to fighting domestic violence and anti-smoking programs in Mills’ proposal.

The governor has already partially walked back a plan to tax certain proceeds of federal business loans after outcry from interest groups and Republicans. She revised her stance to collect no taxes on the first $1 million businesses received. The proposal, while short of full conformity that Republicans prefer, was praised by business interests.

Senate Minority Leader Jeff Timberlake, R-Turner, said in a response to the speech he agreed with Mills’ focus on high-speed internet and the need to support businesses but pulled up short of supporting the bond while saying more work needs to be done to come to consensus on conformity.

That issue and others are likely to come up in early March, when the Legislature is likely to convene to take up the supplemental budget and other issues. Mills’ tax conformity proposal is expected to cover all but 251 businesses that received PPP loans.

“These people are hardworking Mainers and we need to support them, just like we did the 99 percent below them,” he said.

The pandemic’s effect on the state was threaded throughout Mills’ speech, who acknowledged struggles and changes people have faced — from lost loved ones and businesses to high school graduations held in parking lots — as the one-year mark of COVID-19’s arrival in the state approaches. On Tuesday, two more people died and another 142 cases were reported in Maine.

“None of us wished to see the times we have seen these last twelve months, but that is not for us to decide,” Mills said. “All that we can do is decide what to do with the time that is given to us and that’s what Maine people have done.”

Mills’ third address to lawmakers occurred under unusual circumstances in a byproduct of the pandemic that has kept lawmakers mostly at home this year. Lawmakers, who normally mingle in their finest in Augusta prior to the speech, were set to watch and weigh in from home.

Timberlake stressed a desire to work together with Democrats, highlighting the frustration many have expressed about working remotely this session disrupting how lawmakers usually communicate. He was hopeful the upcoming session would provide a chance to work through snags when lawmakers will be able to have in-person conversations.

“Those are the things — the camaraderie — that we will make together,” he said. “We will make better laws, and we will treat the people of Maine better when we’re looking at each other and working together.”