Under the Dome: Inside the Maine State House 2.28.14

Under the Dome: Inside the Maine State House provides a high-level overview of recent activity at the Maine State House. 

Appropriations Committee Sets Out Process, Some Substance of Supplemental Spending

Over the past week, the Appropriations Committee revealed how it intends to close the budget gap for the remainder of the current biennium.  Over the course of two meetings, the Committee described its process as well as some of the substance it will be examining over the coming weeks.  The Committee intends to work on two separate bills, one to close the budget gap for the current fiscal year, which ends June 30th, and another bill to close the budget gap for the next fiscal year.  The Committee is jumping right into this work and will hold public hearings on both bills from March 4th through March 7th

The Committee has identified a roughly $55 million budget gap for the current fiscal year and an even bigger gap during the next fiscal year.  In order to fund these priorities, the Committee must identify new revenues or savings measures in other areas of State government.  New spending may not be controversial, but that probably cannot be said of new revenue proposals, which include, among other things, potentially raising the tax on cigarettes and other tobacco products, eliminating some tax incentives and removing sales tax exemptions for purchases by hospitals and private colleges.  In any event, the Committee’s work on supplemental spending will have to play out quickly, as the Legislature is scheduled to adjourn by April 16th

Revenue Sharing Proposal Quietly Becomes Law

This week, the Legislature’s proposal to close a $40 million budget gap affecting municipal revenue sharing became law without the Governor’s signature.  This was a quiet end to what was a contentious bill.  During the last legislative session, the biennial budget was enacted with a directive that the Legislature identify $40 million in new revenues by modifying current tax expenditures, or else an equivalent amount of funding would be taken from municipal revenue sharing. 

A  task force met throughout the fall to review tax expenditures and to produce a report to the
Taxation Committee.  From there, the Taxation Committee sent its recommendations to the Appropriations Committee.  Ultimately, the Appropriations Committee voted to restore $40 million to municipal revenue sharing, partially funding this approach by taking funds from the State’s “Rainy Day” fund.  Governor LePage did not support this approach to closing this budget gap.  The bill was enacted with broad support in the Legislature and sent to the Governor, who did not act on the bill, letting it become law without his signature. 

Revenue Forecast Positive but Little Help in Balancing the State Budget

Late last week, the State’s Revenue Forecasting Committee met to forecast State tax collections.  The Committee revised previous projections to reflect that there should be a modest increase in taxes collected by the State.  Lawmakers were hoping that revised projections, based on economic growth, would show a significant increase in anticipated revenues, as these anticipated revenue figures could be used to help balance the current biennial budget.  While positive growth is projected, this revised forecast with not solve the current budget dilemma. 

Medicaid Expansion Compromise Proposal Floated

This week, Senators Katz and Saviello, both moderate Republicans, released a proposal to expand Medicaid that they hope will garner enough support to break the Medicaid expansion log jam in Augusta.  Their proposal ties Medicaid expansion to a proposal to transition Maine’s Medicaid program to a managed care system over three years. 

Last year, the Legislature sent Governor LePage a Medicaid expansion proposal two separate times, and both times these proposals were defeated after being vetoed by the Governor.  Another expansion bill is pending in the Legislature but does not appear to currently have veto-proof support.  This new proposal, which ties managed care to Medicaid expansion, however, could potentially pick up support from a sufficient number of legislators to withstand a veto.  More time is needed, however, to assess the true prospects of this proposal.