Proposed Maine budget linked to existing revenue growth

New Maine Gov. Janet Mills’ first budget proposal would hike spending by $700 million without raising taxes or fees.

Mills, who replaced the term-limited Paul LePage in January, outlined an $8.04 billion two-year budget Monday that would be supported by existing income and sales tax revenues.

The Democratic governor says her fiscal plan, which increases spending 11% over the current budget, relies on analysis from independent experts on the Revenue Forecasting Committee of the previous administration who project revenues of $8.3 billion over the next two years.

“This budget is sustainable,” said Mills in her budget address remarks. “It makes responsible investments to tackle serious challenges facing our state.”

The proposed biennial budget tackles infrastructure projects including paving around 2,000 miles of roadways and fixing or replacing about 135 bridges along with improvements to the state’s rail, public transit systems and seaports. She said the capital projects would be supported largely by $200 million of bonds along with $531 million of dedicated state Highway Fund revenue and leveraged federal revenues.

“The budget also allows for bonding for such things as broadband and Land for Maine’s Future, and other appropriate investments," said Mills. “We look forward to working with the Legislature on a bond package that fully meets the state’s needs.”

Mills, a former Maine attorney general, began implementing voter-approved Medicaid expansion to an estimated 70,000 people soon after assuming office after LePage had stalled the law. Her budget allocates $147 million of state funding to expand Medicaid over the next two years, which is expected to trigger around $1 billion of additional federal funds. She also wants to set up a Medicaid Reserve Account of $29 million to cover any contingencies.

Maine Senate Minority Leader Dana Dow, R- Waldoboro, cautioned after the budget address that Mills’ revenue projections may be too rosy because of the chance of an economic downturn.

“The numbers assume that this robust economy is going to stay at the same rate of growth that it has been or maybe even increase,” Low told reporters. “During the good, robust times those are the times when we ought to be saving some money and putting it away in the coffers for the slower times.”

Garrett Martin, executive director of the liberal-leaning Maine Center for Economic Policy, was critical of the budget saying it maintains tax policies instituted under LePage. The group proposed a tax on the state’s wealthiest households that would only affect 4% of tax filers and would generate $308 million of new revenue over the two-year budget cycle.

“By maintaining LePage-era tax cuts, this budget does not provide the necessary resources to fully fund education and local services,” said Martin in a statement. “As budget negotiations unfold in the coming weeks, MECEP will continue to advocate for a real, practical conversation on how to address the revenue challenges.”

Maine's general obligation bonds are rated Aa2 by Moody’s and AA by S&P Global Ratings.