AUGUSTA, Maine — Mainers may have plenty of questions over what is included in the addition to a two-year state budget that lawmakers will likely approve after the Fourth of July.
The Appropriations and Financial Affairs Committee advanced nearly unanimously the plan that includes several amendments to the roughly $900 million package Gov. Janet Mills put forward earlier this year as an addition to the $9.9 billion state budget.
While total spending figures and all details have still not been released, here is a look at several key areas in the proposed addition to the spending plan.
Top priorities for Democrats
More conservative Republicans will likely oppose the budget addition due in large part to it including top legislative priorities for Democrats, mainly a paid family and medical leave program. There is also money for a bipartisan plan to bolster the state’s child care system.
The budget panel approved $25 million in start-up funding for the paid leave proposal from Assistant Senate Majority Leader Mattie Daughtry, D-Brunswick, and Assistant House Majority Leader Kristen Cloutier, D-Lewiston.
The plan underwent various revisions to win support from Mills. It allows workers in Maine to take up to 12 weeks of paid leave and is funded through a 1 percent payroll tax split between employees and employers, with carveouts for small businesses.
The proposal also includes about $30 million a year for a child care overhaul proposed by Senate President Troy Jackson, D-Allagash. Its key provisions include doubling the monthly wage stipend for child care workers from $200 to $400 and increasing child care subsidy income eligibility to families from 85 percent to 125 percent of the state’s median income.
Talking taxes
The budget panel advanced the spending addition with support from all members but one after the inclusion of a pension deduction bill helped draw most Republicans into the deal.
That bill from House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, will continuously raise Maine’s pension deduction starting in 2024 based on the maximum Social Security benefit, after also raising it this year from $30,000 to $35,000. The estimated cost of implementing the change is about $14.1 million in the 2023 fiscal year before rising to $48.4 million in 2026.
“That was the critical piece, when the Democrats accepted particularly the pension deduction at that higher level,” Sen. Rick Bennett, R-Oxford, a budget panel member, said.
Another key initiative included in the budget addition is a change to a popular but criticized property tax freeze program for older Mainers. In 2022, the Legislature quietly approved a measure from Senate Minority Leader Trey Stewart, R-Presque Isle, allowing many Mainers 65 years and older to have property taxes frozen at the previous year’s level.
No limits are placed on the program, taxes can be frozen if Mainers move into a higher-priced community and the state pays cities and towns for the difference. That caused the size and cost of the program to grow each year.
The budget committee has moved ahead with a solution proposed by Bennett. It will end the program and instead expand two existing programs, both of which target low-income seniors and contain income and asset limits.
The budget panel also included an amended plan from House Majority Leader Mo Terry, D-Gorham, that will increase Maine’s $300 child tax credit based on inflation. Progressive groups said the proposal that would have initially raised the credit to $350 would move about 3,500 kids out of poverty.
New business tax breaks
The plan from Mills, a Democrat, to replace longstanding business tax breaks with a more generous “Dirigo Business Incentive” had bipartisan support and the backing of business groups.
Starting in 2025, the incentive will offer $2,000 per worker to businesses that train three or more workers for at least 20 hours in approved programs. It also offers 10 percent credits for capital investments in all counties except York, Sagadahoc and Cumberland, which would qualify for 5 percent credits.
The budget committee approved a change to decrease those credits from larger rates relative to what the governor initially proposed, with the changes expected to bring down the cost of the new program from nearly $55 million to $41 million.
The new incentive represents a shift from Maine’s focus in the early 2000s of tamping down rural employment to a pandemic-era strategy that involves the state incentivizing workforce training amid a labor shortage caused mostly by a wave of older workers retiring.
One of the groups not in favor of the Dirigo Business Incentive is the liberal Maine Center for Economic Policy, which argued it will primarily benefit large businesses and is “the same type of flawed tax giveaway program” that did not work in the past.
What’s not included
Bipartisan deals never fully please everyone. This is no exception.
Ducharme, who opposed the addition for numerous reasons, saw his bill to lower the rate on Maine’s lowest income tax bracket from 5.8 percent to 4.5 percent fail this session. Another proposal from Sen. Joe Baldacci, D-Bangor, to lower various income tax rates died as well.
Other proposals still awaiting votes in the Legislature may run out of steam, as the budget currently leaves them out.
Those include a bill from Rep. Ben Collings, D-Portland, to raise the state’s $13.80 minimum wage to $15 starting in 2024, with an annual cost-of-living increase, and a renewed attempt from Sen. Jill Duson, D-Portland, to ban flavored tobacco sales in Maine, although Duson said last week that she is still looking at ways to enact it.
Small steps on Maine’s big issues
Lastly, the budget addition takes more incremental steps to tackle some of Maine’s biggest issues, with final details and costs still not available.
The budget establishes a statewide Housing First program that provides on-site resources to Mainers with mental health and substance use disorders as part of an initiative that touches on the state’s housing affordability and opioid crises. It also has $1.5 million to build additional rural addiction recovery housing for families.
Mills also offered $31 million to create grants for Maine-based emergency medical services throughout a state that has many rural areas lacking quick access to help.
