Appropriations Biennial Budget 13-14

UPDATE: The House has voted to override the Governor's veto of the 2-year budget 114 to 34. 

The Appropriations Committee caucused all day and throughout the entire night of June 6 into the morning of June 7 when the Committee began to vote on various budget lines beginning around 5:00 A.M.   The Appropriations Committee worked until midnight, Friday night, when it unanimously approved the General Fund Budget.

The Democratic Budget proposal provided for the restoration of $300 million for programs cut by the Governor.  The Republican proposal initially proposed no program restoration unless the funds came from currently funded programs, and argued against any tax increases.  The final budget provides for restorations of roughly $260 million. The increased revenues are derived from a number of taxes and savings including but not limited to:

• A half-penny increase in the Sales Tax from 5% to 5 ½% to yield $133,807,800, which sunsets June 30, 2015,
• An tax rate increase from7% to 8% on meals and lodging to yield $44,643,352, which sunsets June 30, 2015
• Tax Expenditure Study Commission to yield $40 million in savings
• Bonding renovations to state building in lieu of funding from the General Fund to yield $7,136,780 in savings.

Recognized revenue: recognized revenue

Education.   With respect to General Purpose Aid to Education, the Biennial budget:

• Restores $16 million each year of the Biennium to GPA,
• Provides that Casino revenues of roughly $13 million each year that are currently earmarked for miscellaneous expenditures will flow to schools through the EPS formula,
• Shifts teacher retirement costs to school districts,
• Provides for a 1% growth each year in the state share of the cost of education until the state share reaches 55 percent.  This shall be the priority of the department of education before funding any new initiatives,
• Provides that the Commissioner of Education may expend and disburse up to $500,000 in FY 2014 for the Comprehensive Early College Program (note: this is the “Bridge Year” program), and up to $200,000 in FY 2015 for the College for ME-Androscoggin program,
• Rejected the request in the Education budget for $1million for legal defense in regard to charter schools and other issues.
• Amended Part C initiatives.
  • Part C EDU #1
  • Part C EDU #2
  • Part C EDU#3
  • Part C early college

Adult Education – Saved $160,000 in the GED examination by finding an alternative for the next 6 months when the contract comes to an end.   The current contractor proposed to add expensive security features.

Additional EDU Amendments:

EDU positions in GPA

Health and Human Services

The budget also:

• Preserves the Portland Dental Clinic,
• Removes the prohibition of social services to legal immigrants who have not resided in the U.S for 5 years or more,
• Removes the provisions regarding Spousal Disregard that denies benefits to an otherwise eligible spouse in order to provide services to an eligible spouse in need of care,
• Transfers the budgetary and administrative responsibility for the Displaced Homemaker Program from the Department of Labor to the University of Maine System,
• Provides $1.3 million each year  for Head Start to maximize Maine’s use of Federal Block grant dollars under the Federal Child Care Development Fund
• Increases the MaineCare rates for inpatient substance abuse services based on a case-mix index multiplied by the psychiatric discharge rate,
• Provides for the Director of Blind and Visually Impaired to convene a working group to review the Business Enterprise Program, particularly with respect to the charging of utility costs incurred during the operation of the cafeteria.
• Restored funding for the Ineligible Spouse Disregard in which an otherwise Medicaid eligible spouse is denied Medicaid-funded health care because of the other spouse’s income.
• Accepts the recommendation of the Health and Human Services Committee to provide for 7 hospital bed-hold days and 20 Therapeutic bed-hold days for residents in long-term care facilities.

• Provides for additional savings of $1,079,135 each year from “third-party Liability,

• Achieves additional General Fund savings of $10.9 million by:

• Including new and less expensive drugs in the Medicare Part D plans,
• Phasing in payments in the Medicare Part D “donut hole,”
• Eliminating the Medicare Part D wraparound,
• Increasing funding in the Fund For A Healthy Maine  Medical Care Program and decreasing funding in the Medical Dare-Payments to Providers program,
• Reducing the inappropriate use of antipsychotic medication by long-term care residents,
• Reduces funding for Crossover payments in the Medicare Savings Program

• Rejects the Governor’s cuts to General Assistance and TANF, and

 Eliminates the Governor’s reduction in state GA reimbursement to municipalities at 50%, and maintains the 90% reimbursement rate for municipalities in which General Assistance reaches the statutory established percentage of local revenues,

• Makes an individual who is a fugitive from justice ineligible for General Assistance,
• Provides for a hardship extension for sufficient benefits for the necessities of life,

• Provides $2.7 million to meet the State’s obligation under the AMHI Consent Decree
• Provide funding to reduce the number of people on the waiting list for the Section 21 and Section 29 waivers for Developmentally Disabled persons.

Budget compromise good, not great

If you try and craft a budget of $6.3 billion with one political party in control of both the legislative and executive branches, it comes out solely reflecting those views and values of that party.

The reality of this session was we didn’t have that. The budget that was passed, vetoed and eventually overridden, is not a Democratic budget nor a Republican budget, but a reflection of six months of negotiations and compromises. After having actually read the full 700 plus page budget document, I can definitely attest to this fact.

Much of this work is done on the appropriations committee that ultimately has the power to say yea or nay in the final product that reaches our desks in the House and Senate.

I have the utmost respect for the individuals who serve on this committee, as they work day in and day out often forgoing sleep to get this work done.

Before this, individual policy committees comb through the nearly 1,700 bills introduced to weed through the duds and send final recommendations to the appropriations committee.

On my committee of state and local government, we oversee the operations and structure of state, county and municipal government.

A major priority of mine, especially as a new legislator, was to reform the very government structure itself in order to be more efficient and more cost-effective. Not only did I go line-by-line through my own committee’s budget, finding millions of dollars of cost-savings, but also submitted legislation that totaled about $25 million in savings to taxpayers, even going as far as proposing a cut to my own pay. I will delve more into those specific bills and their respective outcomes in an upcoming column.

What I found as a first-time lawmaker throughout this budget development didn’t surprise me.

I wasn’t surprised that many legislators didn’t actually read the budget or many bills prior to casting a pivotal vote.

Oftentimes legislators would use the talking points the party leadership provided the day of a vote and take it as gospel. I also found that the process in Augusta gets in the way of progress.

The process, regardless of who is in power, is not made for individual legislators to really delve into the budget or to even challenge the status quo based on core values unless it’s given the go ahead from leadership first.

The process isn’t made for going line-by-line, ensuring that we are prioritizing spending and trying to responsibly save as much taxpayer money as possible.

Before you start re-checking my party affiliation, I’m just someone who understands that in order to pay for essential programs and services, such as the drugs for the elderly program, or increase education spending, we have to have the money to pay for it.

Raising revenue, which is a clever way to say raise taxes/ fees, should be the last option on the road to a balanced budget, but it shouldn’t be completely left off the table. What I found is that both sides rush to the extremes of their economic philosophies once in power; Democrats tend to rush to the revenue side while Republicans tend to rush to cut entire essential programs altogether.

What is needed is a balance of these two approaches. We must cut wasteful spending, but we must also treat people as something more than a mere number on a spreadsheet and also see what can be fixed in our tax code, like ensuring that those wealthier Mainers pay the same income tax rate as middle class families. That, my friends, is economic fairness.

When we are spending more than $12,000 on bottled water for agencies, a couple hundred thousand for new positions, including deputy commissioners at the request of the Gov. Paul LePage administration, $300,000 per year for legislators to communicate to constituents, and $12.5 million per year to have a Senate do the exact same work as the House, it mind-boggles me as to why we couldn’t cut things of that nature that don’t negatively impact you in order to adequately fund services that do positively impact you on Main Street.

Here are some of the highlights of the two-year budget:

•  Ensures full funding to the Drugs for the Elderly program
•  Closes corporate tax loopholes
•  Continues property tax relief programs to keep people in their homes
•  Temporarily increases the sales tax by half a penny and increases meals and lodging by 1 percent, expiring on June 30, 2015. (example: +$2 on a $200 hotel room)
•  Creates a path to reach 55 percent of the state share of education funding
•  Restores almost two-thirds of the cuts made to the municipal revenue sharing

I would typically vote against individual pieces within this budget, but there are pieces that I do like. As a whole this is the best budget possible given the tense political environment that our chief executive continues to put us in, via his vitriolic kindergarten-style charades.

For the most part, legislators on both sides have put politics and party aside to try and do what is right and work across the aisle to do the job voters sent us there to do.

This budget is a bipartisan compromise that avoided a government shutdown, which would have put this state’s credit rating on a downward spiral and hopefully avoided municipalities having to rapidly increase property taxes higher than they already are.

If you would like to read the entire budget, including summaries of key sections, I’ve put all of the documents on my legislative website. 

Justin Chenette is the state representative for part of Saco. You can get legislative updates about the work out of the 126th Legislature at www.justinchenette.com and Facebook.com/justinforsaco. 

Hospitals.

 Rebases from 2008 to 2012 the year on which the Hospital tax is imposed.   Rejected the annual , updating of the base year,

• Accepted the Governor’s 10% cut to hospital out-patient rates,
• Restored funding for Critical Access hospitals.

State Employees

Restored merit increases for FY 2014

Restored Longevity for the Biennium for state employees eligible for these payments as of June 30, 2013

Provided additional funding of $7.7 million for the State Employee Health Insurance Program,

Extends the Voluntary Employee Incentive Program for the 2014-2015 Biennium.

Criminal Justice

 Provides $500,000 to the Board of Corrections.

• Prepared a letter to the Chairs of Criminal Justice and Public Safety in regard to the current operation of the state’s corrections system and the lack of collaboration and cooperation among the jails and the Prison system.   Proposed penalties for jail administrators and officials who refuse to cooperate with the board of Corrections.

 LCRED

 Joint Select Committee on Workforce Development and Maine’s Economic Future  – Legislative Budget 

The Committee approved and incorporated LD 90, the product of the Joint Select Committee, into the Budget, and funded it with $3 million from the General Fund and $1 million from the Legislative Account.

Transferred $1.5 million from the balance in the Competitive Skills Scholarship Fund to fund the Apprenticeship Program

Transferred the Women, Work, and Community Program to the University of Maine System.

Agriculture

• Provides language and position transfers and reallocations for the merger of the Department of Agriculture and the department of Conservation,
• Provides for the distribution of $3 million in FY 2013 to dairy farmers in need of assistance for the purchase of seed and other products based on hundred-weight,

Provides funding in FY 2014 for the clean- up of the Callahan Mine,

Judicial-Attorney General.   The Committee

• Deappropriated $1.2 million from the Judicial Debt Service program and an additional $786,000 from the same program to be used for collective bargaining costs for the Judiciary.
• Rejected the Governor’s proposal to provide $600,000, of which $300,000 would have come from the Attorney General’s budget, to the Governor’s legal defense account when the Attorney General opined that the Governor’s pursuit of an issue did not meet the need for legal action.
• Provides funding for an additional death investigator
• Provides additional funding for 2-part-time medical examiners,
• Appropriates $200,000 to Pine Tree Legal,
• Appropriates a $5 per hour raise for indigent legal defense attorneys.

Taxation

 Tax Conformity.   Conforms with several provisions in the Federal tax code such as “Married Filing Jointly.”   Caps itemized deductions at $27,000.  Also does not conform with a one year change to the tuition exemption.

• Provides Maine residents with a Maine Adjusted income of up to $40,000 per year, a refundable property tax fairness credit against State income taxes.
• Extends the tax credit for aircraft sales of repair and replacement parts for overhauling or rebuilding of aircraft until 2021
• Accepts the governor’s proposals regarding

• Taxation of publications
• Taxation of digital on-line products
• Suspension of Tax Indexing  and future use of the chained CPI – raises the personal income tax,

• Rejects and replaces the Governor’s tax proposals as follows:
  • Restoration of the Homestead Exemption – Applies to persons under 65 years of age,
  • Replaces the Circuit Breaker with the Tax Fairness credit, for which application can be made on the income tax form.   For persons under 70 who are eligible for the credit, the credit is capped at $300, and $400  for persons 70 and over – with an average gross income of $40,000 or less.
  • Restores the BETR program,

• Rejects conformity with the federal Internal Revenue Code for qualified tuition and related expenses in order to produce savings for the Budget
• Includes technical language to address the LD 1 cap for municipalities

Revenue Sharing

Rejected the Governor’s proposal of $0 for Revenue Sharing and restored $125 million for a two-thirds restoration compared to Revenue Sharing for the 2012-2013 Biennium

Clean Elections

 Restores $2.8 million for Clean Elections for legislative races only.    Funding for Gubernatorial races has been removed.   The Republican proposal was $2.4 million, and the Democratic proposal was $4.7 million.

Task Forces and Studies.   

Creates a Non-profit Tax Review Task Force consisting of 9 members including 2 Senators and 2 Representatives – one from each party, members representing the Association of Non-Profits, the Maine Municipal Association, and the Commissioner of the Department of Administrative and financial Services,

Creates a 13 member Tax Expenditure Review Task Force to examine tax expenditures – Tax exemptions and credits -  in regard to their effectiveness and need.   The Task Force includes 2 Senators and 2 Representatives.

Creates an independent study of the need for a new prison at Windham

State and Local Government

Office of Policy and Management.    Increases from $10 million to $11,250,000 the amount of Savings the Office of Policy and Management [OPM] must find in administrative and efficiency savings in FY 2014.   The budget increases from $20 million to $22,500,000 the amount of savings the Office of Policy and Management must find administratively or by elimination of programs in FY 2015.   If OPM fails to find the savings required, the Governor is authorized to use his curtailment authority to achieve the savings.

Replaced $10 million of appropriations for renovations and repairs to state buildings by appropriately bonding for capital expenditures through the Maine government Facilities Authority.

Provides for the transfer of savings for conversion to natural gas.

Transportation.

Rejected the Governor’s split of funding for the State Police and approved 65% of funding from the General Fund and 35% from the highway Fund.

Veterans and Legal Affairs

Provides for an Office Associate II in the Portland Office which will increase outreach to veterans in Cumberland County.