Governor Mills Unveils Biennial Budget Proposal

The proposal ? which is balanced, does not raise taxes and leaves the Rainy Day Fund untouched ? continues the Governor?s free community college initiative & invests in health care, housing, and infrastructure

Governor Janet Mills today unveiled her Administration?s budget proposal for the Fiscal Year (FY) 2024-2025 biennium. The proposal builds on the significant progress achieved under her last budget by continuing her free community college initiative for another two years, expanding pre-K, building more housing, and strengthening Maine?s health care system, including investing in behavioral health, services for older Mainers and people with disabilities, and child welfare. The proposal also makes an historic investment in infrastructure to unlock vast new sources of Federal funding to fix Maine?s multimodal transportation system.

?If we want to build a stronger, more prosperous state where opportunity is available to all, then we must invest in the infrastructure that supports our greatest asset: the people of Maine,? said Governor Janet Mills. ?From education at every level, to stable housing, to our health care system, to our transportation system, this budget proposal aims to strengthen what Maine people rely on every day to succeed ? all while not raising taxes, living within our means, and protecting us against the possibility of a recession. Every budget I have offered has sought to give Maine people the tools and resources they need in a fiscally responsible manner, and this budget is no exception.?

?This strong, balanced budget is another step forward in supporting the health and welfare of Maine people and in strengthening Maine communities,? said Kirsten Figueroa, Commissioner of the Department of Administrative and Financial Services. ?It is fiscally responsible, ensuring that expenditures do not exceed revenues while maintaining our record high Rainy Day Fund to weather potential challenges in the future.?

?The Governor?s budget targets the ongoing effects of the pandemic on Maine people while envisioning a healthier future in the recovery from COVID-19,? said Jeanne Lambrew, Commissioner of the Department of Health and Human Services. ?It continues to prioritize strengthening Maine?s behavioral health system, supports healthy aging in Maine communities, improves services for individuals with disabilities, strengthens child care and child welfare, and invests in public health now and into the future.?

Taking into consideration the baseline funding impact of enacted legislation on the biennial budget, the baseline budget ? prior to the Governor?s proposal today ? was $9.4 billion. In December 2022, the Revenue Forecasting Committee projected that the State would take in $10.5 billion in revenue for Fiscal Years 2024-2025. This $10.3 billion budget proposal is balanced, does not raise taxes, and leaves the Rainy Day Fund untouched at a record high of more than $900 million. Further, the RFC projected approximately $11.6 billion in revenue for the following Fiscal Years 2026-2027.

The Governor today also presented a supplemental to the current Fiscal Year 2022-2023 budget. The supplemental dedicates General Funds newly-available from the continued Federal COVID-19 public health emergency to one-time supplemental payments for hospitals and long-term care facilities, as well as other initiatives.

The Governor?s budget proposals complement her Maine Jobs & Recovery Plan, approved by the Legislature, to invest nearly $1 billion in Federal American Rescue Plan funds to improve the lives of Maine people and families, help businesses, create good-paying jobs, and build an economy poised for future prosperity.

Highlights of Governor Mills? Budget proposals include:

Strengthening Education, from Child Care and Pre-K to Higher Ed:

• Maintaining 55 Percent Education Funding: $101 million to continue meeting the State?s obligation to pay 55 percent of local education costs.
• Funding Free School Meals: $58 million to fully fund universal free meals for students in public schools and for publicly funded students in approved private schools.
• Expanding Pre-K: $10.5 million to make pre-kindergarten more available and more accessible across Maine.
• Strengthening Child Care: $7.8 million to fully fund the salary supplements for child care workers enacted in the FY 2022 supplemental budget, ensuring that caregivers of young children continue to receive increased pay for their vital work helping Maine children develop and thrive.
• Continuing Free Community College: $15 million to continue providing up to two years of free community college for all students from the high school graduating classes of 2024 and 2025.
• Supporting Higher Education: $41 million to support a 4.5 increase for Maine?s public higher education institutions, including the University of Maine System, the Maine Community College System, and Maine Maritime Academy.
• Improving Higher Education Affordability: $10 million to increase the Maine State Grant Program?s maximum award from $2,500 to $3,000. The Maine State Grant Program provides need-based grants to Maine undergraduate students to help with the cost of higher education. If approved by the Legislature, Governor Mills will have tripled the Maine State Grant Program from $1,000 to $3,000 during her time in office.

Improving the Health of Maine People:

• Investing in Behavioral Health: An historic $237 million in state ($94 million) and federal funds to support mental health and substance use disorder services, including $166 million to increase payment rates to providers as a result of MaineCare?s nationally recognized new rate reform process. This initiative includes $7 million to prioritize direct response to the opioid crisis and funding to support prevention, treatment and recovery services for substance use disorders and catalyzes improvements to behavioral health care for children. Get more information on the DHHS website.
• Strengthening Care for Older Mainers: $169 million in state ($78 million) and federal funds to expand and improve services to help older Mainers age well and safely in their homes and communities, including support for home-delivered meals and programs that reduce abuse, neglect and exploitation. Of this, $116 million will help Maine long-term care facilities recover from the pandemic, including those operated by Maine Veterans Homes, including $47 million in cost-of-living increases. The supplemental budget also proposes a $25 million supplemental payment to long-term care facilities, including nursing facilities. Get more information on the DHHS website.
• Supporting People with Disabilities: $84 million in state ($27 million) and federal funds to improve access to services for people with intellectual and developmental disabilities, including $34 million to ensure that there is no wait for MaineCare Section 29 services and $3 million to fully fund serving additional people through Section 21 on an emergency basis. Another $42 million would fund cost-of-living adjustments for providers, including Sections 21 and 29. More broadly, the budget proposes $5 million to transform service delivery by creating a new Lifespan waiver to connect individuals with the services they need over their lifetime within a single program rather than various sections of MaineCare.
• Improving the Child Welfare System: Nearly $15 million for foster care and adoption assistance and funding to support increased reimbursement rates to foster families and services that help caregivers of young children to build skills to respond to children?s social and emotional needs. This builds on and complements Governor Mills? previous budget initiatives to bridge gaps in the child welfare workforce, implement child welfare recommendations, and improve child safety in Maine.
• Bolstering Maine Hospitals: An additional $25 million in the supplemental budget in state ($6 million) and federal funds to support hospitals? recovery from the COVID-19 pandemic and $23 million in state ($6 million) and federal funds as an initial investment in rate reform for hospitals in the biennial budget.
• Expanding Health Care Workforce: $4 million to continue providing student loan repayment assistance to health care professionals in medicine, dentistry, behavioral health, and nursing education through the Finance Authority of Maine (FAME). Under this Maine Jobs & Recovery Plan program, eligible health care professionals who work in Maine (or commit to doing so) are eligible for up to $75,000 in relief for qualifying student loan debt while nursing educators can receive up to $40,000.
• Extending Small Business Health Insurance Relief: $16 million in the supplemental budget to continue from April to December the Maine Jobs & Recovery Plan program that provides monthly payments of $50 per worker (more for families) to sustain affordable health insurance. Through November 2022, the program has benefited 5,753 small businesses and 46,131 Maine residents.

Building Maine?s Infrastructure, From Housing to Roads and Bridges and More:

• Building Workforce Housing: $30 million to expand affordable rental housing options for workers and their families through equal funding to the Rural Affordable Rental Housing Program and the Low-Income Housing Tax Credit Program.
• Continued Robust Investment in Transportation: $400 million for the Maine Department of Transportation to repair Maine?s multimodal infrastructure system, potentially matching up to $1 billion in federal funds under the Bipartisan Infrastructure Law.
• Pay Off Hospital Bond: Utilizes $26.8 million from the Liquor Operation Revenue Fund to pay off in advance the outstanding debt for the hospital bond and transitions future revenues to the Highway Fund.
• Upgrading National Guard Facilities: $14.3 million to leverage an estimated $18.2 million in Federal funding for National Guard facility repairs and renovations that will result in better training, increased unit readiness, safer working environments for Soldiers, and improved morale.

Providing Property Tax Relief and Other Support:

• Maintaining 5 Percent Revenue Sharing: Maintains 5 percent Municipal Revenue Sharing, continuing to meet the State?s obligation to Maine municipalities and mitigating property taxes increases.
• Enhancing Property Tax Relief: Nearly $17 million to increase by three percent State reimbursement to municipalities under the Homestead Exemption, as passed by the Legislature. Until Fiscal Year 2023, municipalities were reimbursed by the State at 70 percent of the cost. Moving forward, the reimbursement will be increased by 3 percent each year until the State fully reimburses the municipalities to cover the full cost of the program. This builds on the significant property tax relief provided by the Governor and Legislature in the last legislative session.
• Funding Property Tax Freeze Law: $46 million to fund the law, passed by the Legislature, that stabilizes property taxes for individuals 65 years of age or older who have owned a homestead for at least 10 years.
• Supporting Retirees: $6.6 million in the supplemental budget for a one-time payment equivalent to a one percent cost-of-living-adjustment for Maine State Retirees, with an average benefit of $175 for approximately 37,600 state sponsored plan retirees.

Protecting Maine?s Environment:

• Combating Climate Change: $3 million for climate-focused grants, technical assistance, and incentive programs to help Maine communities plan for climate change, reduce carbon emissions, transition to clean energy, and increase their resilience to the effects of climate change through the Governor?s Community Resilience Partnership under Maine?s climate action plan, Maine Won?t Wait.
• Fighting PFAS: Approximately $6 million in state and federal funds across multiple departments to detect and mitigate the impact of PFAS, including sampling and testing for PFAS contamination in wildlife.

The budgets also propose a total of $17 million for the Maine Commission on Indigent Legal Services (MCILS), including $13.2 million to develop a tiered compensation system to increase the hourly rate for assigned legal counsel based on the complexity of the case and $3.6 million to hire ten new public defenders. These new positions would join the five public defender positions authorized in last year?s budget.

The budget proposal builds off the Governor?s previous budget measure that achieves 55 percent of the cost of education, fully restores revenue sharing with municipalities, replenishes the Land for Maine?s Future Program, provides tax relief to working Maine families, and that delivers $850 direct relief payments to Maine people to help with the high costs of inflation? one of the strongest relief proposals in the country.

Last week, Governor Mills also signed into law emergency legislation that provides direct financial relief to Maine families to help them stay warm, safe, and secure this winter amid near record high energy prices.

Under Governor Mills? leadership, Maine?s Budget Stabilization, or Rainy Day Fund, has grown to more than $900 million. Moody?s and Standard & Poor?s credit rating agencies last year also reaffirmed Maine?s Aa2 bond rating and for rating Maine?s debt as stable, even while downgrading ratings of other states, citing Maine?s governance practices and its reserves in the Budget Stabilization Fund.