Maine must take care of its obligations before taking on additional expenses

FOR IMMEDIATE RELEASE: Tuesday, February 4,

MEDIA CONTACT: Julie Rabinowitz, Director of Policy and Communication, 207-292-2722 ext. 102, Julie@mainepbp.com

AUGUSTA — Maine People Before Politics has issued the following statement on the supplemental budget released by Governor Janet Mills today that spends the more than $120 million in surplus revenue identified by the Revenue Forecast Commission, pushing the state budget over $8 billion.

“Governor Mills has placed expansion of state agencies ahead of addressing critical needs, especially our transportation infrastructure,” stated Julie Rabinowitz, director of policy and communication. “Regardless of what we may want to spend our money on, our responsibility as adults is to take care of our obligations before taking on additional expenses. Governor Mills has not prioritized using the cash on hand to pay for the state’s immediate needs. She continues to avoid making hard choices.”

Maine People Before Politics calls Mainers’ attention to three proposals in the Supplemental Budget relating to transportation funding, the liquor revenue bond and unemployment taxes.

Transportation Funding

After Maine DOT canceled projects last year due to cost increases, the agency identified an ongoing $232 million annual shortfall. In her State of the State address last month, Governor Mills asked the Legislature to find the money to “fix the damn roads.” The problem is so bad that her Commissioner of Transportation, Bruce Van Note, stated on January 14, 2020, that Maine DOT is “now competently managing a slow decline of our transportation system.”

Yet, instead of using the surplus money to fix roads and bridges, Governor Mills allocates merely $10 million to fill the gap. She spends the balance of approximately $115 million of the surplus on the expansion of government and asks the state to borrow $100 million for transportation.

“With record revenues, the State of Maine should not be managing the decline of any system,” stated Rabinowitz. “The 10 million of surplus revenue Governor Mills proposes for road, bridges and reducing greenhouse gas emissions is a drop in the bucket. Rather than make difficult choices, the Governor appears to be hoping that the Blue Ribbon Commission on Transportation Funding will come up with new revenue so that she can spend the surplus in other places. This is not a management plan, this is kicking the can down the road.”

Liquor Revenue Bond

Also within the supplemental budget, Governor Mills proposes to move $20 million used to secure the liquor revenue bond to the General Fund. This bond was sold by Governor LePage to pay off the money owed the hospitals from the prior Medicaid expansion.

“Changing the statute to allow Governor Mills to shift $20 million from the revenue bond, where it cannot be spent until the bond is paid off, to the General Fund is playing a shell game with our savings. Twenty-million dollars just happens to be the same amount the Governor proposes to move from the General Fund to the rainy day fund. Moving restricted revenue to the General Fund without spending restrictions sets a dangerous precedent for the Legislature and the Mills Administration to raid the liquor revenue for other so-called priorities,” Rabinowitz stated.

Unemployment Taxes

Despite employers paying the lowest unemployment tax rates for the past few years, the balance of the state’s Unemployment Trust Fund topped half-a-billion dollars in 2019. Maine has been collecting too much in taxes and should return some of that money to employers by further reducing rates. The money employers pay into the Unemployment Trust Fund is used exclusively to pay benefits to people who have lost their jobs through no fault of their own.

Instead, Governor Mills wants to divert millions of dollars in taxes into a new slush fund to pay for the operations of the state’s unemployment system, which is largely funded by the federal unemployment taxes paid by Maine employers. Those taxes are returned to the state via federal grants that pay for the unemployment system.

“The federal government rewards the most efficient states with more funding, but instead of finding efficiencies, the Mills Administration has simply shifted costs onto employers while reducing the amount of money going into the trust fund for benefits for the unemployed long-term. This will make the state dependent on this diversion of funds, resulting in higher costs for employers down the road,” Rabinowitz said. “If the state is collecting too much in unemployment taxes than what is required to cover anticipated benefits, then employers should be allowed to put that money back into their businesses or their worker’s paychecks instead of another government slush fund.”