State’s biennial budget passes by majority vote

The majority budget left Republicans out of budget negotiations

Preceded by contentious debate in both bodies, the Maine Legislature passed a majority $8.3 billion budget along party lines on Tuesday, March 30, voting 77-67 in the House and 20-14 in the Senate. Two Democrats, Sen. William Diamond (D-Cumberland) and Sen. Chloe Maxmin (D-Lincoln), sided with the Republicans and voted against LD 715, An Act to Make Certain Appropriations and Allocations and to Change Provisions of the Law Necessary to the Proper Operation of State Government.

The biennial budget document as enacted is slightly different from an earlier version contained in LD 221.  The amended version of LD 715 contains the baseline budget found in Part A of LD 221 and brought in some of the provisions but not all of them. LD 715 expands education funding by $45 million, increasing the state’s share of school funding to 51.83%, puts $15.5 million more into the Homestead exemption, and sets the state share of municipal revenue sharing at 3.75%. According to the Democrats, passage of the budget now, through the majority budget process, was to ensure it would go into effect within 90 days, thereby avoiding any potential state shutdown threat. The Republicans said they were not interested in any shutdown of state government, but rather wanted to maintain bipartisanship and work together to pass a consensus budget. Their concerns were rebuffed, and the bill passed in the early evening of Tuesday, March 30.

Governor Janet Mills signed the budget on Wednesday, March 31. During the next few months, the Governor will likely propose another supplemental budget bill, and in addition, will need to decide how to spend the federal stimulus money the State expects to receive from the American Rescue Plan Act. To that end, Maine is expected to receive more than a billion dollars from the American Rescue Plan Act. However, although it is likely there will be stipulations on how states can spend it. At this point, with the feds engaged in developing rules and guidelines as to how the money can be spent by the states, it is too early to say whether the money will be available for one time use or to implement new programs that will require on going funding.   

State Revenues Still Strong…

The Consensus Economic Forecasting Commission (CEFC) met on Tuesday, March 30. State revenues are still coming in very strong – largely driven by increases in the sales-and-use tax and the wage-and-salary revenue lines. The 2020 wage-and-salary lines were revised from -1.5% to 1.4%. Of course, this has already been realized or “in the bank” as they call it.  For 2021, the wage-and-salary lines have been revised upwards from 3% to 5% growth, which is amazing given the impact of the pandemic. Sales tax revenues for February are up 14.5% over same time last year. It was noted that sales taxes for March will be coming in at roughly the same increase.

The commission discussed the outlook for the tourism season as well.  It was noted that the outlook in this sector looks very promising as bookings are up. It was also noted that the labor market is improving as well. The commission is now preparing its report, which should be available by the end of this week. The Revenue Forecasting Committee (RFC) will take this information and will likely meet the end of April before its report is due May 1, 2021.  

If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing [email protected].