Under The Dome: Inside The Maine State House 12-6-2013

by Pierce Atwood LLP

Augusta, ME

Under the Dome: Inside the Maine State House provides a high-level overview of recent activity at the Maine State House.

Budget Issues a Certain Component of Next Year’s Legislative Agenda

Maine’s budget process calls for the enactment of a biennial budget during the first year of the two-year legislature. A biennial budget was enacted earlier this year in the First Regular Session, but that does not mean that the State is on a fiscal glide path to the close of the biennium. Much work will need to take place during next year’s legislative session to ensure the State’s budget remains in balance. Over the past few weeks, some light has been shed regarding the contours of this work.

Just this week, the Tax Expenditure Task Force assembled for its final meeting to identify $40 million in new revenues. The Task Force contended with the politics of tax policy and what some members characterized as a lack of information. Ultimately, the Task Force adjourned without developing a consensus report. Regardless of the content of the Task Force’s final report, any tax changes will have to be adopted by the Legislature next year and those with an interest at stake will continue to work to influence any tax changes. If $40 million in new revenues are not enacted next year, whatever amount is lacking is slated to be taken from municipal revenue sharing to ensure a balanced budget – this is a result some lawmakers want to avoid.

In addition to this $40 million question, additional savings will need to be found next year to keep the State’s budget in balance. The Governor’s Office of Policy and Management was directed to find over $33 million in savings over the biennium. This office did produce recommendations to achieve these savings, some which can be achieved through Executive Branch action alone and some that require legislative authorization. Those elements requiring legislative approval will have to move through the process next year and there are indications that Democratic leaders in the Legislature will not support all of these recommendations.

Take heart, not all budget news in recent weeks is bad. At the end of November, the Maine Revenue Forecasting Committee projected increased General Fund revenues of over $20 million during the current biennium. This news was greeted with cautious optimism by Sawin Millett, Commissioner of the Department of Administrative and Financial Services. These increased revenues can be used to help close budget gaps over the biennium, potentially easing the job of legislators who must find a way to keep the budget in balance.

Politics of Medicaid Expansion Being Fought on Many Fronts

One of the biggest policy questions that will be decided by the Legislature next year relates to the expansion of Medicaid under the federal Affordable Care Act. Democrats in the Legislature, along with a number of legislative Republicans, have been advocating for Medicaid expansion, a policy Governor LePage strongly opposes and vetoed successfully two times during the 2013 session. This issue will be revisited next year and the issue is now being framed and discussed in various venues.

The Administration’s decision to contract with a Medicaid consultant to produce a report regarding potential Medicaid savings remains a front page issue. The contract price and the consultant’s past work in the field have been sharply criticized. Additionally, a recent Administration decision to relocate a Department of Health and Human Services office from downtown Portland to South Portland has been used as an example of the Governor’s “war on the poor,” according to Senate President Alfond. While these events stand on their own, the associated arguments will be part of the debate when the Legislature considers Medicaid expansion next year.

The Administration has not sat on its hands during this debate. This week, Mary Mayhew, Commissioner of the Department of Health and Human Services, addressed the Portland business community at the Portland Regional Chamber’s Eggs and Issues breakfast. Commissioner Mayhew used this opportunity to argue that Medicaid expansion as unsustainable and that current Medicaid spending is crowding out other State spending priorities.

Both sides of this debate will continue to press their points until this matter is taken up by the Legislature and likely will continue to argue this issue until the November 2014 elections.

Written by:

Pierce Atwood LLP

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