Gov. Janet Mills delivers her State of the Budget address, Tuesday, Feb. 14, 2023, at the State House in Augusta, Maine. Credit: Robert F. Bukaty / AP

AUGUSTA, Maine — Gov. Janet Mills aligned with business groups on Thursday to urge fellow Democrats to rein in a paid family and medical leave plan in a move that could nudge progressives toward sending the issue to a referendum next year.

While Mills has held meetings in recent weeks with industry groups opposed to the push and the two Democrats leading it, she did not lay out her specific objections to the measure publicly until a legislative hearing on the bill on Thursday.

Legislative Democrats almost universally support paid leave, while nearly all Republicans oppose it. This makes Mills the key figure in any legislative solution. But a coalition of progressive groups can put their version on the ballot if they do not like that product, something that Mills wanted to avoid but seemed to be a likely path this week.

“I would prefer a legislative solution, but I think that we will make the decisions that we have to make to ensure that we have a program that is universal,” Destie Hohman Sprague, the executive director of the Maine Women’s Lobby, a liberal group backing the referendum push, said after Mills laid out her changes.

The measure being heard on Thursday, from Assistant Senate Majority Leader Mattie Daughtry, D-Brunswick, and Assistant House Majority Leader Kristen Cloutier, D-Lewiston, would make Maine the 13th state to adopt some form of paid leave program.

Almost all are funded through a payroll tax capped at 1 percent of wages under that plan. It would be split evenly between employers and workers, except that companies with fewer than 15 employees would be exempt from their portion. Workers would be eligible for up to 12 weeks of leave per year, with payments capped at the state’s average weekly wage.

Certain parts of the Daughtry-Cloutier plan were slight concessions to businesses relative to a different plan from a state commission, including their stripping of job protections for workers who take leave at firms with fewer than 15 workers.

However, businesses lined up to assail other parts of the measure on Thursday. Mills outlined a long list of concerns in testimony from Elise Baldacci, her deputy chief of staff, in testimony. Among them was a desire to consider lower wage replacement down to as little as 66 percent, as well as a hardship exemption Mills deems “too complex to implement” and other changes.

Such a low wage cap would likely be a dealbreaker for progressives whose referendum would result in “a payroll tax implemented through a blunt policy” that would not be responsive to Mainers and businesses, Baldacci argued. She urged lawmakers to arrive at a solution in the State House, even if it takes until 2024.

“The governor believes that when it comes to complicated public policies like this one there is always middle ground,” she said.

That progressive ballot initiative loomed over the hearing, with one volunteer who collected signatures for the progressive Maine People’s Alliance saying they heard “powerful stories” about the need for paid leave in an aging state.

A University of New Hampshire poll of Maine earlier this year found majority support for paid leave, although the question did not address funding. Supporters have cited that polling as one reason lawmakers should move on the issue, but business groups also looked ready to have that fight, saying they tried to engage with lawmakers but found little common ground.

“Without significant modifications to the legislation before you, Maine’s workforce and economy will suffer,” Quincy Hentzel, the CEO of the Portland Regional Chamber of Commerce, said in written testimony on Thursday.

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...