Under the Dome: Inside The Maine State House 1-18-13

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Augusta, ME

Under the Dome: Inside the Maine State House is a weekly update that provides a high-level overview of recent activity at the Maine State House. If you would like more specific information regarding an item in this newsletter or related to government relations, please contact a member of our Government Relations Practice Group: John Delahanty, Andrea C. Maker or Avery Day.

Pace of Legislature Beginning to Pick Up

For the most part, the Legislature is still getting up and running. This week, roughly 60 bills were printed and referred to committee and these bills are now being noticed for public hearing. Committees that met primarily received briefings from the State agencies that they oversee and some committees allowed stakeholders to introduce themselves through brief remarks.

A Joint Order was considered to establish the Joint Select Committee on Maine’s Workforce and Economic Future. Senator Seth Goodall (D – Sagadahoc) and Representative Seth Berry (D – Bowdoinham) will chair this committee and additional committee members will be named soon.

Legislators continued to be occupied with submitting legislation this week. The deadline for submitting bills was 4:00 p.m. today, January 18th. As with any deadline, there has been a flurry of activity in the past few days by those seeking to get bills submitted under the wire.

The one major exception to the Legislature’s slow start is the Appropriations and Financial Affairs Committee, which met throughout this week to receive briefings on a number of issues, including the Governor’s supplemental budget proposal. This Committee has already scheduled public hearings on the supplemental budget and will begin hearing from the public on Wednesday, January 23rd.

Taxing, Borrowing and Spending

On January 11, 2013, Governor LePage released both his supplemental budget proposal to balance the State’s budget for the current fiscal year, which ends June 30, 2013, and his biennial budget proposal to fund State Government for the following two years. Those who closely follow State spending continue to review the details of these mammoth documents. While the finer points of these two proposals are being examined, the broad brush strokes of both budgets are now being discussed in Augusta.

The supplemental budget largely involves finding savings so that the State can account for over $87 million in unanticipated MaineCare spending during the current fiscal year. Savings are found through initiatives included in a recently issued curtailment order and through other proposed cuts. In addition to these savings measures, the supplemental budget proposes transfers, including a $40 million transfer from the State’s “rainy day fund,” in order to balance the current budget. While some may disagree, the supplemental budget does not seem to contain major policy initiatives wrapped in budget language. Rather, this proposal is largely about balancing the State’s books.

The Governor’s biennial budget proposal is a $6.3 billion spending plan for the next two fiscal years. Unlike the supplemental budget, this proposal certainly has a number of policy decisions baked into the budget numbers, with the largest policy issue being State support for municipalities. This proposal reduces funding for municipalities across programs, including suspending municipal revenue sharing, reducing funding for teacher retirement, capping general assistance and reforming excise taxes. Those who are starting to voice opposition to the Governor’s proposal are quick to point out that funding cuts for municipalities may result in increased property taxes. Further, they argue that support for municipalities could be restored, at least partially, by delaying income tax reductions scheduled to go into effect this biennium. Those who support the Governor’s proposal argue that reducing support of municipalities may spur reforms and efficiencies at the local level, averting property tax increases. Further, supporters of the Governor’s plan firmly reject the need to increase revenues by delaying income tax reductions enacted by the previous Legislature.

With a document as large as the biennial budget, there are, of course, more issues over which there will be considerable debate. Included among these miscellaneous items is a directive that the recently created Office of Policy and Management find $30 million in savings over the next biennium as well as a directive that this office identify 100 State positions to be eliminated by October of this year. Also included in the biennial budget is language that would authorize a $100 million bond for construction at the Windham prison. One issue that may receive the attention of the Maine press is a proposed repeal of a sales tax exemption on publications like newspapers.

The ball is now in the Legislature’s court and the Appropriations Committee will soon begin working through these proposals line by line. In fact, the Appropriations Committee will begin holding public hearings on the supplemental budget next week. These budget proposals will evolve during the legislative session as the Appropriations Committee negotiates these documents.

Related to State spending but not contained in these budget proposals is the Governor’s recently announced plan regarding bonding. In a January 15, 2013 press conference, Governor LePage announced that he was submitting emergency legislation that would authorize the State to borrow against future liquor revenues generated by the state's liquor distribution business in order to pay the State’s debt to Maine hospitals. The Governor also said that once this plan to pay the hospitals was in place, he would then be in a position to issue approved bonds. The Governor’s decision to delay issuance of approved bonds has been a simmering issue for some time, as those who will benefit from these bonds are eager to access this funding. The Governor’s announcement regarding bonds just adds more moving parts to the Legislature’s consideration of State taxing, borrowing and spending for the next two years.

Pierce Atwood Hosts Members of Legislative Leadership

Neither snow nor cold prevented Pierce Atwood’s latest Inside Policy Series event on January 16th. Roughly 60 people ventured out on a snowy morning for a breakfast presentation by members of legislative leadership. The audience heard from Senate President Justin Alfond, Speaker of the House Mark Eves and Senate Minority Leader Michael Thibodeau (House Minority Leader Kenneth Fredette was one casualty of the bad weather, as he was not able to make the trip from Newport). Leaders talked about their priorities for the session, the Governor’s biennial budget proposal and their intention to work together this legislative session. While some obvious policy disagreements were discussed, there was also common ground among these members of leadership.

Topics:  Legislative Committees, State Budgets

Published In: Elections & Politics Updates, Finance & Banking Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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