Gov. Janet Mills proposed an additional $187 million in education funding in a revision of the recently approved state budget Wednesday, as well as other allocations to the state’s Medicaid program and “rainy day” fund.
The education spending, if approved by the Legislature, would bump the state’s share of public school funding to 55 percent of essential service costs, a mandate in law that’s never been met since it was approved by voters 17 years ago.
“This budget proposal focuses on improving the lives and livelihoods of Maine people and on strengthening our state for years to come,” Mills said during an online press conference announcing the proposal.
She credited prudent fiscal management by her administration during the pandemic and federal support for the healthy revenue forecast that shows the state will collect $941 million more than expected over the next two years.
“As a result, we can not only fully fund education for the first time in our history, but we can give money back to the taxpayers through revenue sharing, tax fairness credits for property taxpayers, and income tax relief for low-income and middle-class families,” Mills added.
Her proposal also includes a what she considers, “a host of bipartisan priorities” including measures that would provide tax relief and improve health. The budget “change package” also increases state revenue sharing with town and city governments.
The proposal also socks another $52 million into the state’s so-called “rainy day” savings account meant as a backstop for state government when the economy sours. The addition would raise the fund to a record level of $313 million.
The package would also put $90 million in federal funds towards the state’s Medicaid stabilization fund, as a contingency. Mills said the budget changes are meant to aid the state’s post COVID-19 pandemic economic recovery and achieve long-term growth for the state’s people, businesses and communities.
In addition, Mills would use $32 million to offset state sales tax revenue that would be lost if menthol cigarettes, flavored cigars and vaping products were banned for sale in Maine, as proposed by a bill moving through the Legislature. The federal FDA is also signaling it will likely place federal ban on menthol cigarettes in the months ahead.
The governor’s proposal essentially updates the $8.3 billion, two-year state budget that was passed in March by majority Democrats in the Legislature. The proposal also complements her recently announced plan for using $1.3 million in federal American Rescue Plan Act funding heading to Maine. In addition, the spending enhances a $140 million borrowing plan Mills released last week to support road repair and construction and land conservation.
In March, Mills signed the new two-year budget into law over Republican objections. She said then that an update was already in the works, following a state sales and income tax revenue forecast that was buoyed by large infusions of federal pandemic relief to businesses and individuals in 2020.
Her latest spending package could rocket through the Legislature as early as next week, with or without Republican support, as the bill will only need a majority vote to become law. The Legislature’s budget-writing Appropriations and Financial Affairs Committee is set to meet Friday in a work session on the package and will likely act quickly to set much of the plan into action.
Mills said she intended the bill to be passed as an emergency measure, which would allow it to go into effect immediately upon her signature. However, that would require two-thirds support in both the House and the Senate and minority Republicans could balk at parts of the package.
Mills said emergency passage would be important for the school funding portion of the package because it would allow local school districts to plan their budgets based on the increases. Most school budgets in Maine go to local voters for ratification in June.
Democrats could still pass the measure with majority-only votes, but it would not go into law until 90 days after the Legislature adjourns.
Republicans have asked that significant portions of the surplus revenue be returned to taxpayers, especially those who continued to work through the pandemic. They have suggested a $10,200 state income tax credit for those workers, which would match a tax credit given on unemployment benefits to those who lost their jobs because of restrictions meant to slow the spread of the virus in Maine.
Republicans have also pushed to increase state revenue sharing with town and city governments and to grow property tax exemptions for homeowners.
Mills said she was not fully informed on the Republican proposal, including how much an income tax credit would cost. She also demurred on how much room there was for negotiations on the package, noting it would next move to the Legislature for initial debate.
The proposal drew quick reaction and praise from those it would impact Wednesday.
“Today’s announcement exemplifies the kind of leadership and commitment to education that Maine students deserve from their governor,” Eileen King, the executive director of Maine School Superintendents Association said in a prepared statement. “Gov. Mills is upholding a promise and the will of Maine people to support and prioritize our schools.”
But Matthew Gagnon, the chief executive officer of the right-leaning Maine Policy Institute, criticized the proposal in a written statement.
“The 55 percent state funding requirement for public education is arbitrary, and while this standard is required by law, throwing money at Maine’s education system has not, and will not, lead to better educational outcomes,” Gagnon said. He also criticized Mills’ inclusion of the $32 million for lost tobacco tax revenue, noting that the bill had not been approved by the Legislature.
This story will be updated.