Gov. Janet Mills’ plan to balance budget cuts road funding, swallows up LePage liquor reserves

Gov. Janet Mills poses for a photo with a group of liberal lawmakers and others.

AUGUSTA – A lot more of the money Gov. Paul LePage managed to save for Maine taxpayers during his tenure in office will disappear under Gov. Janet Mills’ recently approved plan to try to bring Maine’s budget into balance. Along with the LePage savings, a significant chunk of money for Maine’s roads and bridges will disappear into the black hole of Maine’s budget deficit, which is driven by spending increases in virtually every department except roads and bridges in the new state budget last year.

After increasing spending by about $800 million, or 11%, in her first year in office, Gov. Mills and her fellow Democrats now face a shortfall of almost the exact same amount in their second year.

To many, the budget problems are unsurprising. As Mills’ budget proposal moved toward passage last year, Republican lawmakers, conservative policy wonks and others warned that Governor Mills’ spending left no room for even the slightest downturn.

An analysis in 2019 of Mills’ budget proposal by Maine Policy concluded that if even a moderate recession were to occur, “this level of spending would significantly hurt the state and subsequently put the burden on Maine taxpayers.” That analysis predicted that Mills would face budget shortfalls that would require spending cuts or tax increases, as the Governor had not proposed to save any money for a so-called “rainy day”, leaving less than $400,000 of Maine’s nearly $8 billion in projected revenue unspent.

Maine Policy predicted that the Mills budget was setting Maine up for fiscal ruin.

Maine People Before Politics, a non-profit that watches the Mills Administration’s moves very closely, predicted future budget problems as well. MPBP has also criticized Gov. Mills’ refusal to address the budget shortfall as it began at the start of the COVID-19 pandemic, warning that as time passed, Mills would face greater difficulty bringing the budget back into balance.

“Even a small downturn in Maine’s economy could have a disastrous impact on this budget, and there are some indications of real Rainy Days ahead,” predicted Senate Republican Leader Dana Dow in June of 2019.

Other lawmakers and legislative leadership shared the same concern, but Governor Mills and her allies insisted that the spending increases be advanced.

Now Maine faces a massive budget shortfall exceeding $500 million in the current budget year and about another $800 million in the next budget, roughly the equivalent of her spending increase.

To close the current shortfall, Mills is turning to one-time funding sources, including money left in reserve by Gov. Paul LePage and raiding funds for Maine’s roads and bridges.

The state’s liquor revenue reserves, which exist as a result of Governor Paul LePage negotiating a better liquor licensing deal than Gov. John Baldacci’s disastrous arrangement, had previously been used as collateral to borrow funds to pay off hospital debt left unpaid by the Baldacci Administration. Under Mills’ curtailment, $70 million of that revenue from past years and current, will go to close Maine’s budget deficit.

Another $23 million from Maine’s highway fund will go into the budget hole. That may upset Mainers who do a lot of driving and have seen little in the way of improvements on Maine’s roads after Mills increased spending in virtually every department except transportation last year.

Another $17 million in highway funds will be gobbled up once Mills can acquire legislative approval, her office said.

The biggest chunk of money Mills will dump into the budget hole will be one-time funds from the federal government. Those funds, provided to the state through the Federal CARES Act, may help in the current budget, but because they are one-time funds, they do nothing to solve Maine’s long-term budget shortfall.

Conservative commentators have noted the irony that the two largest pools of cash Governor Mills is using to try to keep Maine in balance were provided by two political opponents (President Donald Trump and Gov. Paul LePage) that she has routinely attacked and vilified.

Mills has taken significant criticism for continuing to spend during the pandemic, including land purchases and a program to buy new or near-new cars for welfare recipients.

In her first year, Mills provided taxpayer funding of abortions, welfare for illegal immigrants among a host of new spending lines, while holding back supplemental funding for Maine’s nursing homes.

Maine’s state budget is a two-year budget document which is proposed by the Governor in January of odd-numbered years. It is then worked on and revised by the Maine Legislature to be passed later that year.

Maine has a constitutional requirement to maintain a balanced budget, which the state typically does through what are known as supplemental budgets. In this instance, Governor Janet Mills is using what is known as a curtailment, a process allowing her to make adjustments to the state’s spending, without the legislature’s approval.

Leaders in the Maine Legislature have not agreed to meet in more than six months. They have found themselves at an impasse where Republican leaders will only agree to come in to take up COVID-19 and emergency legislation, such as budget related matters, whereas Democrats have pushed to come back and consider all the legislation that was on the table when they left.

Republicans warn that Democrats would come back into session and spend tens of millions of dollars more that the state does not have.

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