The Mills budget was unveiled Wednesday, setting up a battle with minority Republicans in the Legislature.
Gov. Janet Mills speaks at her inauguration ceremony on Jan. 4, 2023, at the Civic Center in Augusta. Credit: Robert F. Bukaty / AP

AUGUSTA, Maine — Gov. Janet Mills released a $10.3 billion state budget proposal on Wednesday, calling it “fiscally responsible” even though it looked likely to prompt a fight with Republicans over an inflation-driven rise in spending without tax cuts.

The two-year plan will be a centerpiece of legislative debate in 2023. It comes during a time of tension in Augusta. Mills already struggled to pass a $473 million heating aid plan, which Senate Republicans held up for weeks.

But Mills remains in the driver’s seat after winning a second term in the 2022 election. Democrats kept control of the Legislature and minority Republicans have been divided on spending so far. If the majority party detects obstinance, they could set aside the traditional consensus budget process and pass a budget alone by April.

The governor seemed loath to do that at a Wednesday news conference, but she did not rule it out. Instead, she said her budget offer should win wide approval in the State House.

“This budget envisions a two-thirds enactment and I see no reason why it shouldn’t achieve that,” Mills said.

Mills’ offer would hike the state budget above $10 billion for the first time, amounting to a $900 million increase over the current budget cycle. It contains few major new initiatives, according to an outline from the governor’s office. Mills billed it as a document that “carries through what we promised before” and provides “stability in government.”

It keeps income taxes flat, continues funding K-12 education and municipal revenue sharing at statutory levels long unmet before her tenure, contains $58 million to keep funding free school meals and continues a free community college program.

The document attempts to address some of Maine’s most pressing issues, though advocates are likely to say it does not go far enough. It dedicates $30 million to rental housing during a wide affordability crisis, $15 million for foster care and adoption and $17 million more for the embattled legal services program for low-income Mainers, far below a funding request.

The governor’s budget would draw down $490 million in state and federal funds for behavioral health, expanding services for seniors and improving access to services for people with intellectual and developmental disabilities that have been subject to long-standing waitlists.

This budget offer would wipe out the smaller Section 29 waitlist and put $3 million toward emergency services in the Section 21 program, the budget outline says. There is another $42 million to bolster wages for providers that struggled to retain workers during the pandemic.

Mills is also putting $400 million into transportation in an effort to draw down up to $1 billion under the federal infrastructure law passed last year. Another $46 million will be dedicated to a new law freezing property taxes for seniors, a program that will grow each year.

Mills’ tenure has been marked by a wave of federal COVID-19 aid that kept state budgets afloat during the COVID-19 pandemic. It led to runaway surpluses that enabled an $8.5 billion state budget in 2021, plus $1.2 billion more in a spending bill centered on relief checks last year. Another $280 million surplus fueled the heating aid measure passed this month.

Recession fears are high entering 2023, and other states are running into budget problems, including in California, where Gov. Gavin Newsom outlined cuts to bring the budget into balance. Mills noted revenue projections of $10.5 billion for the two-year cycle beginning in June, arguing that her proposal is responsible given a record $896 million in a reserve fund.

Legislative Republicans have long decried spending levels under Mills. After she took office in 2019, they were only able to cut a scant amount from her $8 billion proposal during negotiations. They were incensed when Democrats bypassed them in 2021 to pass an initial budget along party lines.

It could happen again with differing positions among Republicans on spending already. The House caucus engaged with Mills to win more relief checks in the heating aid deal, while Senate Republicans won nothing except their hearing before handing over the votes needed to pass it.

At a news conference on Wednesday, Republican legislative leaders said they were committed to a two-third budget and applauded some of the money for those health care priorities, but they decried the sharp increase in spending without a tax cut, saying securing one was a priority.

“Clearly, if we’ve got over a billion dollars more in hand than we had just two years ago when we went through this exercise, the people of the state of Maine are taxed too much,” said Senate Minority Leader Trey Stewart, R-Presque Isle.

BDN writer David Marino Jr. contributed to this report.

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...