Debate Begins Over Spending or Saving Projected Surplus

This week, the Maine Revenue Forecasting Committee estimated a $73 million revenue surplus in the General Fund for this biennium, due in large part to income tax collections coming in higher than projected. Governor Paul LePage has stated that he wants the entire surplus to be transferred into the state’s Rainy Day fund, but the Legislature has not agreed. Many bills are travelling through the Legislature which will have a price tag on them if enacted. The fate of these dollars is unlikely to be resolved until the very end of the legislative session when the Legislature can consider all fiscal requests.

Tax Conformity Battle Continues

The Maine Legislature is still at odds over tax conformity. The Republicans are standing by their position that tax conformity should be enacted for the full biennium and must be dealt with separate and apart from other issues.  Democrats will only agree to one year of tax conformity, but they will consider two years if the Legislature first resolves a $23 million education funding shortfall and other potential fiscal impacts that arise this session. Tax conformity is estimated to cause a loss in state revenue of about $17 million per year. The education funding shortfall for affected municipalities is due to the application of the education funding formula, which is resulting in a reallocation of dollars away from municipalities that are experiencing declining student population and/or increasing municipal valuations.  As of now, the apparent stalemate continues.

Maine Legislators Renew Effort to Expand Medicaid

Since 2013, Maine’s Legislature has unsuccessfully attempted to expand its Medicaid program, as allowed under the Affordable Care Act. This session, Republican Senator Tom Saviello is sponsoring the sixth attempt in the form of a bill that would give about 70,000 low-income Mainers the option for coverage. The expanded Medicaid coverage would include increased access to substance abuse treatment and mental health counseling. Proponents of the bill are hopeful that the recent opiate epidemic will bring legislators together in support of the bill. If passed, it is expected that Governor LePage will veto the bill based on his administration’s claim that it will cost the state $315 million over the next five years.

Lawmakers Debate Constitutional Amendment on Citizen Petition Signature Gathering

In the face of an increasing trend to legislate policy via citizen initiatives on a statewide ballot, the Legislature is considering a bill to create a more rigorous process to earn a spot on the ballot. A Resolution has been proposed to amend the Maine Constitution to require that each county be represented by at least 5% of the signatures collected on any citizen initiated petitions. Specifically, the signatures required from each county would have to be equal to at least 5% of the total votes cast in that county in the most recent gubernatorial election. The House and Senate have voted in the last two weeks, by simple majority, to advance the bill. However, because the bill proposes to amend the Maine Constitution, it will ultimately require two-thirds votes in both the House and the Senate before then being placed onto the fall ballot for ratification by the voters.

Governor Paul LePage Shifts Positions to Allow the Land for Maine’s Future Program to Move Forward

After a nearly year-long fight to block the release of voter-approved bond money for the Land for Maine’s Future program, Governor Paul LePage agreed to release $5 million of funds in December. He also agreed to nominate three new members to the LMF board so that the Board will once again have a quorum and be able to operate.  This week, the Agriculture, Conservation and Forestry Committee voted to recommend the nominees to the Senate, which then voted to confirm them on Thursday, February 25, 2016.  The overall effect of the Governor’s change in position with the release of funds and the appointment of new Board members is to allow the Land for Maine’s Future program to continue planning for future projects, something that was uncertain a year ago.

Funds in Publicly Funded Campaign Program Running Low

The executive director of the Maine Commission on Governmental Ethics and Election Practices, Jonathan Wayne, told the Legislature this week that the fund for Maine’s publicly financed campaign system could run out this year due to withdrawals from the fund by the Legislature combined with an increasing demand on the fund.  On Tuesday, February 23 Mr. Wayne told the Appropriations Committee that lawmakers have redirected nearly $12 million from the fund into other programs.  Despite the Legislature’s effort to repay money to the fund, more candidates are entering the program after last fall’s citizen referendum that significantly increased the amounts to be provided to candidates who opt to run their campaigns with public funding.  At the same time, two different reports from the Tax Committee propose other funding methods.  The Republicans’ report recommends funding the increase from the General Fund, and the Democrats’ report recommends funding it by requiring corporations who file Maine income tax returns to pay Maine income tax on income earned in specified countries that have been labeled as “tax havens.”  The debate over funding will likely continue for several weeks as the Legislature considers next steps.