The Maine Legislature is set to vote soon on a sweeping proposal to spend the state’s $1.2 billion revenue surplus, more than half of which will go back to residents via direct checks.
The spending plan also calls for significant investments in education, including Democratic Gov. Janet Mills’ $20 million plan to provide free community college tuition for high school students graduating between 2020 and 2023. It also allocates $66 million to address PFAS contamination, including compensation for Maine farms that have been affected by the so-called forever chemicals.
There are other big-ticket items in the proposal, which last week received unanimous support of the Legislature’s budget-writing committee. There are also some significant omissions, including no additional funding for the state’s legal defense program for the poor.
The bill largely aligns with the governor’s February proposal to spend the surplus, which is driven by higher than expected revenue projections and a significant slug of federal pandemic relief aid passed by Democrats in Congress last year.
Direct payments
Mills has framed the proposal as pandemic assistance and also an inflation mitigator. The key feature is the $850 direct payments that will go to roughly 850,000 Maine tax filers, accounting for roughly 60% of the projected surplus.
The governor’s proposal originally met resistance from Republicans, who supported direct payments last year, but later pushed for permanent tax cuts to align with a key initiative touted by Mills’ re-election opponent, former Gov. Paul LePage. GOP lawmakers have largely yielded on the tax cuts and are now supporting the direct payments after pushing to broaden eligibility to higher earners.
Mills originally proposed sending payments to single filers who make up to $75,000 a year, and couples who make $150,000.
Republicans successfully pushed to broaden the payments to single filers making up to $100,000 and couples making $200,000. Democrats went along with the increase, but not before taking criticism from progressive activists who called for sending more of the surplus into government programs.
The direct payments in Maine are part of a national trend in state legislatures, particularly those controlled by Democrats. At least a dozen states have proposed some sort of payment, or rebate, this year, according to the National Conference of State Legislatures. Republicans have called for permanent tax cuts, but some warn that spending one-time surplus money that way is risky because future revenue surpluses are not guaranteed, particularly in an economic recovery made uncertain by the pandemic and ongoing efforts by the Federal Reserve to control inflation.
Tax programs
The spending plan uses roughly $7 million of the surplus to expand the property tax fairness credit program through the end of the current two-year budget.
Doing so will increase the property tax fairness credit from $750 for people under age 65 to $1,000, while people 65 and older will see the benefit increase from $1,200 to $1,500.
Roughly 100,000 Maine families will also see an additional benefit from the earned income tax credit program.
Legal defense for the poor
So far, the surplus spending plan does not include additional funding for the Maine Commission on Indigent Legal Services, or MCILS, the agency that oversees the state’s legal defense program for low-income people accused of committing a crime.
The commission has faced numerous funding challenges and more recently has come under scrutiny for the quality of its work. The ACLU of Maine is suing the commission for falling short of its constitutional mandate to provide competent legal defense for the poor.
Commission officials have called for additional funding to train rostered defense attorneys and pay them more. But that money is not included in the surplus spending plan despite an endorsement by the Judiciary Committee, which is the oversight committee for MCILS.
The current budget increased MCILS funding so that it can increase the hourly wage paid to defense attorneys, but this year’s proposal to increase it further — from $80 to $100 an hour — has so far been omitted.
Free community college tuition
Meanwhile, recent high school grads and some current students could save thousands of dollars on tuition under another provision of the budget.
Lawmakers endorsed Mills’ proposal to earmark $20 million of the surplus to cover up to two years of community college for high school students who graduate between 2020 and 2023. The initiative is aimed at helping students whose high school education was impacted by the COVID-19 pandemic.
To be eligible, students must enroll full-time at any community college in Maine and earn at least 30 credits per year toward either a two-year degree or a one-year certificate. Students must live in the state and accept any additional funding sources (such as scholarships) before tapping into the state’s funds to cover tuition and fees.
Students already enrolled in the community colleges who graduated from high school since 2020 are also eligible, as are individuals who obtain a G.E.D. or the equivalent of a high school diploma between 2020 and 2023.
In announcing the program earlier this year, the Mills administration estimated that 8,000 students could utilize the benefit to “earn a credential of value unburdened by the debt of tuition and mandatory fees and ready to enter the workforce.”
In-state tuition at Maine’s community colleges is approximately $2,800 a year for students enrolled full-time and mandatory fees add another $800 to $1,100 to the annual bill, according to figures from the Maine Community College System. There are seven community college campuses and four off-campus centers around the state.
Addressing PFAS
The spending plan also contains more than $60 million to respond to the growing problem of environmental contamination involving the so-called “forever chemicals” known as PFAS.
Last year, lawmakers budgeted $30 million to address PFAS pollution, including the collection of test samples from more than 700 sites around the state that are considered to be at higher risk of PFAS contamination. The funding effort reflects the fact that those sites were potentially polluted through a state-licensed program to use treated municipal or industrial sludge as fertilizer.
The supplemental budget would set aside $60 million to create a Fund to Address PFAS Contamination within the Department of Agriculture, Conservation and Forestry. Potential uses of money within that fund include a buy-back program for contaminated farmland and ongoing health monitoring for farmers whose land or water is polluted with PFAS.
While that’s an enormous sum for Maine, advocates say it still likely won’t be enough to “make whole” the lives of farmers whose lives and livelihood have been upended by the PFAS crisis, not to mention the neighbors whose wells are also polluted. It’s also substantially less than the $100 million that the full Legislature endorsed earlier this year.
Another $6.2 million would pay for other assistance or research programs within the agriculture department and for the Maine Department of Environmental Protection to help stand up laboratories in the state capable of analyzing samples for the presence of PFAS. Right now, most PFAS tests are sent out of state and typically cost hundreds of dollars per sample.
PFAS, which is short for per- and polyfluoroalkyl substances, are a family of chemicals that have been widely used for decades in coated consumer products. But some types of PFAS have been linked to serious health concerns.
Lobster litigation
The spending plan would also set aside $3 million of the surplus for a Lobster Fisheries Litigation Fund within the Maine Department of Marine Resources.
DMR has joined the Maine Lobstermen’s Association’s lawsuit seeking to block new federal rules aimed at protecting endangered North Atlantic right whales. The National Marine Fisheries Service contends the rules — which require weak breakaway points on lobster lines or other gear modifications — are necessary to prevent more whales from becoming entangled in the ropes that connect lobster traps to a surface buoy. Scientists estimate that there are fewer than 350 North Atlantic right whales left in the world.
But the Maine Lobstermen’s Association and the state contend the new rules were based on a faulty scientific assessment by the federal government. They are also fighting a seasonal closure of roughly 950 square miles of federal waters used by some lobstermen in Maine.
The state has also joined as an intervener against another lawsuit filed by the Center for Biological Diversity, the Conservation Law Foundation and Defenders of Wildlife claiming that federal rules were failing to reduce risks posed by lobster gear to whales. The lobster industry and the state claim the lawsuit could shut down the billion-dollar fishery altogether.
Housing assistance
The Maine State Housing Authority would receive an additional $22 million infusion for an Emergency Housing Relief Fund as part of the proposed supplemental budget.
According to the budget language, the funds can be used “to provide rental assistance, supplement or create other programs addressing the needs of people experiencing homelessness or facing other immediate housing needs, supplement other short-term rental assistance programs, create supportive housing for people with disabilities, mental health challenges or substance use disorder using an approach that prioritizes providing permanent housing to people experiencing homelessness and support other uses to address housing emergencies in the state.”
MaineHousing offers a variety of assistance programs, including emergency rental assistance, subsidized housing, foreclosure prevention programs as well as home energy assistance programs.
Retired state employees
In addition to the $850 checks that many will receive, retired state government workers will also see a 1% bump in their benefit payments.
This is a cost-of-living-adjustment, or COLA, for retirees who are part of the Maine Public Employees Retirement System, also known as MainePERS. The budget would also tweak the maximum benefit amount that can be used to calculate that COLA, lifting it to just over $24,000.
And a 1% COLA comes with a pretty hefty price tag: $104.8 million, or roughly 9% of the anticipated surplus.
