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Maine state budget (2012-2013)

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A proposal by Gov. Paul LePage in January 2013 aimed to take $14 million in casino funds earmarked for public schools and move those funds to the state General Fund to help fill a $112 million budget gap.[1]

As of November 28, 2012, the state faced a $35 million budget shortfall. As a result, the governor was expected to issue a spending curtailment order in mid-December.[2]

On June 20, 2011, Gov. Paul LePage signed the $6.1 billion state budget for fiscal year 2013 into law. The governor said that he appreciated the tax cuts in the budget, but added that he believed that the cuts would be insufficient in the long run. He said that further spending cuts would be needed, perhaps as soon as the January 2012 legislative session.[3] The governor had initially wanted $203 million in cuts, but the legislature made just $150 million in tax cuts.[4]

The 540-page budget can be accessed here.

Legislators addressed a gap of more than $83 million gap through June 30, 2013 that remained in the state's Department of Health and Human Services' budget when they passed a supplemental budget on May 15, 2012.[5] Gov. LePage signed the revised budget on May 16, 2012.[5] Highlights of the revised budget included:

  • Elimination of health care coverage for more than 20,000 people;[5]
  • Cuts to prescription drug coverage for senior citizens;[5]
  • Reduction of funding for Head Start.[5]

Legislators planned to use $25 million of the fiscal year 2012 surplus, which would have brought in another $50 million in matching federal dollars, to pay off some of the state's debt to hospitals. The state owed Maine hospitals at least $460 million for underpayment going back six years.[6]

Supplemental budget

Gov. LePage signed the supplemental budget into law on April 24, 2012. He line item vetoed funds for the state psychiatric hospitals.[7]

The Legislature approved a supplemental budget bill on April 12, 2012, but it varied significantly from Gov. LePage's proposed version. The legislative version included $31 million in new spending for 2012 and 2013, which was offset by $41.8 million in general fund savings. The legislative budget shifted savings from one area to fill in shortfalls in other areas.[8] The governor said he would not sign the bill because he felt it did not sufficiently address welfare reform.[8]

The Appropriations Committee agreed on a supplemental state budget for the two years ending in mid-2013 on April 9, 2012. Democrats said the budget avoided the full force of Republican Gov. Paul LePage's proposed cuts in general assistance, and it fully restored funding to Maine Public Broadcasting Network, which the governor's proposal did not.[9]

The governor proposed a supplemental budget, which can be accessed here, to address the $220 million budget shortfall at the Department of Health and Human Services, which is responsible for the state's growing Medicaid program. The supplemental budget would have restructured Medicaid eligibility and payments. Medicaid accounted for 21 percent of the general fund budget and 32-percent of all spending in Maine.[10]

In January 2012, the governor threatened to close schools and use that money to keep the state running should Democratic lawmakers modify his supplemental budget plan, although that would be difficult for the governor to accomplish unilaterally.[11]

Streamlining Commission

Maine has a Streamlining Commission comprised of lawmakers and members of the public. The group was responsible for developing proposals to trim $25 million from the fiscal year 2013 budget.[12] The group did identify $25 million in cuts when it concluded its work in November 2011 and its recommendations were subject to public hearings prior to going to the legislature in 2012. The cuts targeted redundancies, ranged from a $20,606 reduction for school-based health centers to a $3.1 million reduction in reimbursements to acute care hospitals for outpatient services. The cuts can be accessed here.[13]

Health and Human Services

The budget included welfare rollbacks, including eliminating benefits for legal non-citizens not receiving them now, but legislators rejected a LePage proposal that would have eliminated MaineCare benefits for parents who earn between 133 percent and 200 percent of the federal poverty level and for childless adults.[3]

In November 2011, the head of the Department of Health and Human Services said that she expected a budgetary shortfall of more than $70 million by the end of fiscal year 2012 due in part to an increased use of social services and the failure to achieve some planned cost savings.[14]

Pension reform

The budget required that the state pay down a $4 billion unfunded liability by 2018.[3] It did so in part with a one-year freeze on increases in state worker pensions and limiting annual cost-of-living increases to three percent.[4]

Estate tax

On January 1, 2013, the estate tax exemption doubled from $1 million to $2 million[15]

Legislative proposed budget

Both the House and the Senate approved the $6.1 billion state budget.[4] The Legislature's Appropriations Committee reached a compromise on a $6.1 billion state budget on June 9, 2011. The committee's budget plan included tax cuts and welfare reform and scaled back the scope of pension reforms proposed by the governor. It also continued funding for the Maine Public Broadcasting Network that the governor wanted to eliminate altogether.[16]

Governor's proposed budget

Gov. Paul LePage proposed a $6.1 billion budget for the 2012-2013 biennium. It cut $203 million in taxes in part by lowering the top income tax bracket from 8.5 percent to 7.95 percent and saved $413 million in general fund spending for the state's unfunded pension liability. Under the proposed budget, state workers would have faced a three years' freeze in pensions, the retirement age for new hires would have risen from 62 to 65 and the workers' retirement contributions would have rise by two percent. [17]

In the first week of May 2011 the governor proposed a revised budget in light of an unexpected $164 million deficit. To plug the hole, the governor planned to eliminate more than 250 state positions, most of which were vacant at the time of his announcement, and increase the pension contributions of employees. The revised budget also eliminated MaineCare (the state Medicaid program) eligibility for childless adults and changed the state's welfare program to make people ineligible for state welfare if they qualified for federal assistance.[18]

As state lawmakers inched toward passing a budget, a proposal to eliminate the Maine Rx program that reduces prescription drug prices was replaced with a plan to make the program self-sufficient through $15 per year fees. The amount earmarked to buy state police vehicles was reduced.[19]

References

  1. The Bangor Daily News, "LePage wants to use casino money earmarked for education to close state’s budget hole," January 26, 2013
  2. The Boston Globe, "Red ink flowing in Maine budget," November 28, 2012
  3. 3.0 3.1 3.2 The Bangor Daily News, "LePage signs budget but says it only does half the job," June 20, 2011
  4. 4.0 4.1 4.2 Businessweek, "House, Senate OK Maine's $6.1 billion budget," June 16, 2011
  5. 5.0 5.1 5.2 5.3 5.4 The Morning Sentinel, "Gov. LePage signs state budget," May 16, 2012
  6. The Maine Public Broadcasting Network, "Maine Hospitals Worried State Won't Be Able to Pay What It Owes," July 31, 2012
  7. MPBN.net, "Gov. Paul LePage Signed the Supplemental State Budget," April 24, 2012
  8. 8.0 8.1 The Bangor Daily News, "Legislature gives initial approval to supplemental budget; LePage says he won’t sign," April 12, 2012
  9. WGME.com, "Maine budget gets key committee's OK," April 10, 2012 (dead link)
  10. Maine.gov, "LePage Administration Introduces Supplemental Budget Addressing Medicaid Shortfall," December 6, 2011
  11. MPBN, "LePage Threatens to Close Maine Schools if Democrats Change Budget Plan," January 20, 2012
  12. Morning Sentinel, "Budget-cutting panel continues quest for $25M," September 15, 2011
  13. The Bangor Daily News, "State budget task force agrees on $25 million in cuts," November 2, 2011
  14. Businessweek, "Maine department projects $70 million budget gap," November 7, 2011
  15. Forbes, "Ohio Repeals Its Estate Tax; Maine And Oregon Tweak Theirs," June 30, 2011
  16. Businessweek, "Panel agrees on $6.1B state budget in Maine," June 10, 2011
  17. Businessweek, "Hearings on 'Spartan' Maine budget open," March 1, 2011
  18. The Bangor Daily News, "LePage budget fix would cut welfare benefits, state jobs," May 10, 2011
  19. Business Week, "Maine budget writers get closer to accord," June 6, 2011