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Maine state budget

Maine
Biennial
Fiscal Year 2012-2013
Signed into law June 20, 2011
GF Revenue


Maine operates on a biennial budget schedule, with the current biennial budget for FY2012-13 totaling $6.1 billion. [1]

For the coming fiscal year, however, the state faces a shortfall of almost $1 billion.[2]

Maine has a total state debt of approximately $17,692,888,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. [3]

See also: The Maine State Budget on State Budget Solutions
2011 State spending & deficit in billions[4]
Total spending Pension Health care Education Welfare Protection Transport Debt
$8.9 $0.8 $3.4 $1.1 $1.2 $0.4 $0.6 $6.1
2011 Local spending & deficit in billions[4]
Total spending Pension Health care Education Welfare Protection Transport Debt
$5.7 $0 $0.1 $2.1 $0.2 $0.4 $0.40 $3.5


[edit] Fiscal Year 2012-13

On June 20, 2011, Gov. Paul LePage signed the $6.1 billion state budget for FY2012-13 into law. The governor said that he appreciated the tax cuts in the budget, but added that he believed that the cuts would be insufficient in the long run. He said that further spending cuts will be needed, perhaps as soon as the January 2012 legislative session.[1] The governor had initially wanted $203 milion in cuts, but the legislator made just $150 million in tax cuts.[5]

The 540 page FY2012-13 budget can be found here.

Legislators addressed a gap of more than $83 million gap through June 30, 2013, that remained in the state's Department of Health and Human Services' budget when they passed a supplemental budget on May 15, 2012.[6] Gov. LePage signed the revised budget on May 16, 2012.[6] Highlight of the revised budget include:

  • elimination of health care coverage for more than 20,000 people;[6]
  • cuts to prescription drug coverage for senior citizens;[6]
  • reduction of funding for Head Start.[6]

Supplemental Budget

Gov. LePage signed the supplemental budget into law on April 24, 2012. He line item vetoed funds for the state psychiatric hospitals.[7]

The Legislature approved a supplemental budget bill on April 12, 2012, but it varied significantly from Gov. LePage's proposed version. The legislative version includes $31 million in new spending for 2012 and 2013, which is offset by $41.8 million in general fund savings. The legislative budget shifts savings from one area to fill in shortfalls in other areas.[8] The governor said he would not sign by the bill because he feels it does not sufficiently address welfare reform.[8]

The Appropriations Committee agreed on a supplemental state budget for the two years ending in mid-2013 on April 9, 2012. Democrats say the budget avoids the full force of Republican Gov. Paul LePage's proposed cuts in general assistance, and it fully restore funding to Maine Public Broadcasting Network, which the governor's proposal did not.[9]

The governor proposed a supplemental budget, which can be found here, to address the $220 million budget shortfall at the Department of Health and Human Services, which is responsible for the state's growing Medicaid program. The supplemental budget would restructure Medicaid eligibility and payments. Medicaid accounts for 21-percent of the general fund budget and 32-percent of all spending in Maine.[10]

In January 2012, the governor threatened to close schools and use that money to keep the state running should Democrat lawmakers modified his supplemental budget plan, although that would be difficult for the governor to accomplish unilaterally.[11]

Streamlining Commission

Maine has a Streamlining Commission comprised of lawmakers and members of the public. The group is responsible for developing proposals to trim $25 million from the FY2013 budget.[12] The group did identify $25 million in cuts when it concluded its work in Nov. 2011 and its recommendations will be subject to public hearings prior to going to the legislature in 2012. The cuts target redundancies, range from a $20,606 reduction for school-based health centers to a $3.1 million reduction in reimbursements to acute care hospitals for outpatient services. The cuts can be found here.[13]

Health and Human Services

The budget includes welfare rollbacks, including eliminating benefits for legal noncitizens not receiving them now, but legislators rejected a LePage proposal that would have eliminated MaineCare benefits for parents who earn between 133 percent and 200 percent of the federal poverty level and for childless adults. [1]

In November 2011, the head of Department of Health and Human Services said that she expects a budgetary shortfall of more than $70 million by the end of FY2012 due in part to an increased use of social services failure to achieve some planned cost savings.[14]

Pension Reform

The budget requires that the state pay down a $4 billion unfunded liability by 2018. [1] It does so in part with a one-year freeze on increases in state worker pensions and limiting annual cost-of-living increases to 3 percent.[5]

Estate Tax On Jan. 1, 2013, under the state budget the estate tax exemption will double from $1 million to $2 million[15]

[edit] Legislative Proposed Budget

Both the House and the Senate approved the $6.1 billion FY2012 state budget.[5] The Legislature's Appropriations Committee reached a compromise on a $6.1 billion FY2012 state budget on June 9, 2011. The committee's budget plan includes tax cuts and welfare reform and scales back the scope of pension reforms proposed by the governor. It also continues funding for the Maine Public Broadcasting Network that the governor wanted to eliminate altogether.[16]

[edit] Governor's Proposed Budget

Gov. Paul LePage proposed a $6.1 billion budget for the FY2012-13 biennium. It cut $203 million in taxes in part by lowering the top income tax bracket from 8.5 percent to 7.95 percent and saves $413 million in general fund spending for the state's unfunded pension liability. Under that proposed budget, state workers would face a three years' proposed freeze in pensions, the retirement age for new hires would rise from 62 to 65 and the workers' retirement contributions would rise by 2 percent. [17]

The first week of May 2011 the governor proposed a revised budget in light of an unexpected $164 million deficit. To plug the hole, the governor would eliminate more than 250 state positions, most of which were vacant at the time of his announcement, and increase the pension contributions of employees. The revised budget also would eliminate MaineCare (the state Medicaid program) eligibility for childless adults as well as change the state's welfare program that would make people ineligible for state welfare if they qualified for federal assistance.[18]

As state lawmakers inch toward passing a budget, a proposal to eliminate the Maine Rx program that reduces prescription drug prices was replaced with a plan to make the program self-sufficient through $15 per year fees. The amount earmarked to buy state police vehicles was reduced. [19]

[edit] Transparency

See also: Evaluation of Maine state website or Constitutional provisions regarding reading of bills or see sample transparency legislation at the Sunshine Standard

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State DatabaseSearchabilityGrantsContractsLine Item ExpendituresDept/Agency BudgetsPublic Employee Salary
Maine.gov DataShareY
600px-Yes check.png
N
600px-Red x.png
N
600px-Red x.png
Y
600px-Yes check.png
N
600px-Red x.png
N
600px-Red x.png

[edit] Independent transparency sites

The Maine Heritage Policy Center has created a website, www.maineopengov.org, that provides transparency information for citizens.

[edit] Fiscal Years 2010-11

The state's two-year budget for FY2010-11 totalled $5.6 billion.[20] Lawmakers anticipated $85 million in federal Medicaid funds, but the state received only $76 million.[20] The state saw $70 million more in revenue than projected, and the majority of those funds were required by law to go into the state's rainy day fund.[20]

Maine ended FY2011 with a surplus of $48.9 million, 1.7 percent over the projected figure.[21] Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

In March 2011, Gov. LePage said he would introduce another supplemental budget bill due to a shortfall in MaineCare that is, in part, the result of a ruling by federal judge that the state must reimburse $30 million that they overcharged the federal government. [22]

The state announced on July 20, 2010, that it ended Fiscal Year 2010 with a surplus of more than $70 million.[23] Then Gov. John Baldacci said that the surplus resulted from higher-than-expected revenues from corporate income and sales and use taxes, and also from limiting spending by state agencies. State law requires the surplus to be allocated to a number of state funds, including the rainy day fund, the Finance Authority of Maine's Loan Insurance Reserve Fund, the General Fund's operating capital and the state retirement system and retiree health fund.[23]

[edit] Budget cuts

In Oct. 2010 Gov. Baldacci ordered $10 million in budget cuts which he said were necessary because the state received less federal funding than it had budgeted for and the economic uncertainty.[20] Legislators on both sides of the aisle said that they support the governor's action.[20] The governor has power of cutailment, permitting the governor to temporarily reduce spending in some areas without legislative approval.[20]

The cuts include eliminating $5.6 million from the Department of Health and Human Services budget, $1.4 million in the state treasurer's office and about $1.2 million in spending freezes through the Department of Administrative and Financial Services.[20] Although the governor did reduce funds for the Department of Education, lawmakers said that they expected cuts to come in the future.[20]

The governor ordered the budget cuts despite the fact that the state's revenues the first few months of FY2011 are approximately $22.5 million over projections.[20] The Maine Revenue Services explained that the revenue figure could be due to the timing of payments and not an actual increase.[20]

[edit] Passage of Budget

For FY 2011, Maine was facing an expected $438 million budget gap.[24] At the time the state's budget was passed, the gap was $310 million, less than originally predicted due to increased federal funding and optimistic economic predictions.[25]

On March 30, 2010, the Maine State Legislature approved the state's supplemental $5.7 billion two-year budget[26], which closed a $310 million gap between revenues and expenses.[27] The Senate voted to approve it by 110-35, and the Senate tally was 31-2.[27] The budget includes cuts to social programs such as MaineCare, revenue sharing and school subsidies that legislative leaders called painful, but the budget also includes no general tax or fee increases.[27]

Gov. John Baldacci signed the bill on April 1, 2010.[28]

Rep. Sawin Millett, the ranking Republican on the Appropriations Committee, worried that the budget's reliance on one-time money will means more cuts for the next two-year cycle.[26] He said that the current budget will leave the state with a structural gap that will exceed $1 billion in the future.[26] The budget bill cut $47 million from the Department of Education and $22 million from the Department of Health Human Services.[27] Other measures in the budget include higher education cuts amounting to nearly $8 million and revenue sharing reductions amounting to $16 million.[27] The cuts to the Maine school system will help make up for the $100 million of derailed federal funding.[29]

Other highlights of the FY2011 Budget[26]:

  • Reduced fees for vital records by providing general funds to cover the lost revenue. Fees for birth and death certificates will be lowered from $60 per copy to $15.
  • Set up two initiatives to encourage delinquent taxpayers to pay outstanding balances through programs set to run from September through November.
  • The State Planning Office is required to come up with a plan by Nov. 30 to reorganize and save $225,000. The general fund portion of the office’s budget is $2 million.
  • The State Liquor and Lottery Commission to enter into an agreement to offer the new lottery game Mega Millions.
  • The Department of Conservation will install “iron rangers” – fee collection boxes – in certain unstaffed areas of state parks and historic sites.
  • A work group to study the delivery of mental health and substance abuse outpatient services will be established.
  • The state librarian must designate a nonprofit organization to provide private support for the library.
  • The budget provides $3.5 million to pay for the state’s share of disaster assistance dating back to flooding in 2005.

Expenditures 2010-11 Biennial General Fund Budget[30]

Category Amount
K-12 Education$2,433,577,775
Health Care-Medicaid$1,203,267,461
Public Safety, Justice and Law Enforcement$581,606,666
Economic Development$75,529,848
Health Care: Non-Medicaid$685,144,869
Higher Education$544,262,787
Debt Service$244,154,949
Property Tax Relief$70,103,958
Other$104,395,230
Natural Resource Management$147,723,172
Legislature$59,323,475
Arts and Humanities$17,568,312

[edit] Budget figures

Maine's top 2 sources of revenue are Individual Income Taxes (43.4% for the 2010-2011 biennium) and Sales & Use Taxes (32.3% for the 2010-2011 biennium).[31]

Maine's shortfalls:[32]

FY 2009 FY 2010 FY 2011
$129 million$196 million$244 million

Maine's General Fund Revenues in billions (estimated FY 2010-2013):[33]

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
$3.09$2.83$2.78$2.77$2.87$2.97

However, even though the state budget is looking at $438 million gap, some agencies, the Maine Transportation Authority have seen increase to their operating budget. The MTA's budget has increased 82.5 percent since 1997.[34]

[edit] Pensions

The state retirement system will need an additional $287 million in the next budget cycle compared with the current state budget to keep it in the black.[35] Maine Public Employees Retirement System executive director, Sandy Matheson, said that the system will need approximately $448 million in 2012 and $468 million in 2013, for a totaling $916 million for the FY2012-13 budget cycle, compared with the current budget cost of $629 million. The fund lost nearly 19% in FY2009 and had gained 11% as of June 2010. The state is required to pay off all the debt by 2028.[35]

One of every 10 taxpayer dollars goes toward state employee and teacher pension funds, and the [pinetreewatchdog.org Maine Center for Public Interest Reporting] predicts that within five to six years pension costs could account for 20% of the budget.[36][37] The state owes the retirement system $4,432,000,000, to be repaid by 2018 in accordance with the state constitution.[37]

[edit] Budget Background

On or before September 1st of even-numbered years, the judicial branch, the legislative branch and each executive branch department or agency prepare a budget request for the next two fiscal years. The most important restriction on the Legislature in enacting a budget is the Maine Constitution’s guarantee that the State’s budget will be balanced in each fiscal year of the biennium which results from its prohibition on deficit financing. There are two sections in the State Constitution which address the issue. Article IX Section 14 prohibits the State from incurring long-term debt of more than $2,000,000, except for certain specified emergencies, without a vote of the people. In addition, Article V, Part Third, Section 5 prohibits the use of proceeds from the sale of bonds for current expenditures.[38]

The Consensus Economic Forecasting Commission (CEFC) was originally established by Executive Order on May 25, 1992, in order to provide the Governor, the Legislature and the Revenue Forecasting Committee with analyses, findings and recommendations for state economic assumptions to be used in developing state revenue forecasts. Creation of the commission was in response to a recommendation of the Special Commission on Government Restructuring in 1991 to establish an independent, consensus process for state economic and revenue forecasting. Public Law 1995, chapter 368 enacted in statute the Consensus Economic Forecasting Commission, maintaining both the structure and intent of the original Executive Order.[39]

The CEFC is required to develop two year and four year economic forecasts for the State of Maine. In performing this duty, the commission is required by statute to meet twice each fiscal year. No later than November 1st and February 1st annually the commission must develop its findings with regard to the economic assumptions or adjustments to the existing economic assumptions for the State of Maine. The commission submits its findings to the Governor, the Legislative Council, the Revenue Forecasting Committee and the Joint Standing Committee of the Legislature having jurisdiction over appropriations and financial affairs. The Revenue Forecasting Committee is required to use the economic assumptions and forecast of the commission in developing its four-year revenue projections.[40]

[edit] Accounting Principles

Main article: Maine government accounting principles

Maine’s audit reports are published online by the Department of Audit. The Maine Department of Audit's primary responsibility is to audit the financial statements of the State of Maine and expenditures of federal programs. Neria R. Douglass has been State Auditor since 2005. The Auditor’s statutory authority are under Title 5, Chapter 11 of Maine’s Revised Statutes.[41]

The Institute for Truth in Accounting (IFTA) rates Maine “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Maine’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[42] Maine's CAFRs are published online by the Office of State Controller. Edward A. Karass is the State Controller of Maine.[43]

[edit] Stimulus

Maine has received $1.3 billion in federal funding.[44]

[edit] Public Employees

Main article: Maine public employee salaries
Main article: Maine public pensions

According to 2008 Census data, the state of Maine and local governments in the state employed a total of 102,812 people.[45] Of those employees, 68,424 were full-time employees receiving a net pay of $238,495,641 per month and 34,388 were part-time employees paid $24,146,291 per month.[45] More than 54% of those employees, or 56,31 employees, were in education or higher education.[45]

The Maine State Payroll is posted in searchable form on MaineOpenGov. A searchable database of local government salaries is also found at MaineOpenGov.[46]

[edit] See Also

[edit] External links

[edit] References

  1. ↑ 1.0 1.1 1.2 1.3 The Bangor Daily News "LePage signs budget but says it only does half the job" June 20, 2011
  2. ↑ The Bostone Globe "No new taxes, say Maine candidates" Sept. 13, 2010
  3. ↑ State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  4. ↑ 4.0 4.1 USA Spending, State Guesstimated* Government Spending
  5. ↑ 5.0 5.1 5.2 Businessweek "House, Senate OK Maine's $6.1 billion budget" June 16, 2011
  6. ↑ 6.0 6.1 6.2 6.3 6.4 The Morning Sentinel "Gov. LePage signs state budget" May 16, 2012
  7. ↑ MPBN.net "Gov. Paul LePage Signed the Supplemental State Budget" vApril 24, 2012
  8. ↑ 8.0 8.1 The Bangor Daily News "Legislature gives initial approval to supplemental budget; LePage says he won’t sign" April 12, 2012
  9. ↑ WGME.com "Maine budget gets key committee's OK" April 10, 2012
  10. ↑ "LePage Administration Introduces Supplemental Budget Addressing Medicaid Shortfall" Dec. 6, 2011
  11. ↑ MPBN "LePage Threatens to Close Maine Schools if Democrats Change Budget Plan" Jan. 20, 2012
  12. ↑ Morning Sentinel "Budget-cutting panel continues quest for $25M" Sept. 15, 2011
  13. ↑ The Bangor Daily News "State budget task force agrees on $25 million in cuts" Nov. 2, 2011
  14. ↑ Businessweek "Maine department projects $70 million budget gap" Nov. 7, 2011
  15. ↑ Forbes "Ohio Repeals Its Estate Tax; Maine And Oregon Tweak Theirs" June 30, 2011
  16. ↑ Businessweek "Panel agrees on $6.1B state budget in Maine" June 10, 2011
  17. ↑ Businessweek "Hearings on 'Spartan' Maine budget open" March 1, 2011
  18. ↑ The Bangor Daily News "LePage budget fix would cut welfare benefits, state jobs" May 10, 2011
  19. ↑ Business Week, Maine budget writers get closer to accord, June 6, 2011
  20. ↑ 20.0 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 The Portland Press Herald "Federal funds fall, so budget gets cut" Oct. 2, 2010
  21. ↑ WMTW.com "Maine Ends Fiscal '11 Nearly $50 M In Black" July 27, 2011
  22. ↑ The Republic "Maine governor to submit another supplemental budget to eliminate shortfall" March 28, 2011
  23. ↑ 23.0 23.1 "State sees $70M surplus for '10 budget" July 21, 2010
  24. ↑ Bangor Daily News,"Gov. Baldacci defines goals for final year," January 2, 2010
  25. ↑ MyfoxMaine.com "Maine House, Senate Pass State Budget" April 1, 2010
  26. ↑ 26.0 26.1 26.2 26.3 The Portland Press Herald "Budget to erase state shortfall wins approval" March 31, 2010
  27. ↑ 27.0 27.1 27.2 27.3 27.4 Business Week "Maine lawmakers enact budget rewrite" March 31, 2010
  28. ↑ Forbes.com "Maine Governor signs bill slashing state budget" April 1, 2010
  29. ↑ Maine Watchdog, Derailed FMAP May Trigger Education Cuts, June 31, 2010
  30. ↑ Budget at Glance
  31. ↑ Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  32. ↑ Gov. Baldacci's Office, "Budget Table and Chart," May 1, 2009
  33. ↑ Gov. Baldacci's Office, "Budget Table and Chart," May 1, 2009
  34. ↑ Maine Watchdog, MTA Budget Up 82.5% Since ’97 Despite Payroll Reductions, Sept 22, 2010
  35. ↑ 35.0 35.1 [=Article$0@46585;Article MaineBiz Daily "State tackles budget, retirement system debt" July 9, 2010]
  36. ↑ The Lewiston Sun Journal "Pensions to eat up larger share of state budget" July 28, 2010
  37. ↑ 37.0 37.1 Maine Center for Public Interest Reporting "Looming bill for pensions will command larger share of taxes paid to state" Last visited July 28, 2010
  38. ↑ Maine State Legislature, "Budget Process," retrieved October 24, 2009
  39. ↑ Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  40. ↑ Maine Bureau of Budget, "Governor’s Recommended 2010-2011 Biennial Budget Overview," January 9, 2009
  41. ↑ Department of Audit Web site, retrieved October 24, 2009
  42. ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  43. ↑ Office of State Controller Web site, retrieved October 24, 2009
  44. ↑ Recovery, "Stimulus Spending by State"
  45. ↑ 45.0 45.1 45.2 2008 Maine Public Employment U.S. Census Data
  46. ↑ MaineOpenGov.org
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