Democrats move to pass baseline budget to prevent chance of state shutdown

AUGUSTA — Democrats in the Maine Legislature are moving to pass a baseline state budget by the end of next week to prevent a possible government shutdown this summer – a move that would still leave room for future debate over whether to cut taxes or increase spending amid historically high revenues and surpluses.

The Appropriations and Financial Affairs Committee announced Thursday that it plans to divide Gov. Janet Mills’ $10.3 billion two-year budget proposal into two separate bills. The first would include “the baseline budget for each existing program and a subset” of new spending proposals, which would essentially ensure existing services and programs can continue beyond July 1. Details of what would be included in the second budget bill are not yet known.

The announcement from the Democratic co-chairs of the committee shows the party is intent on passing a basic operating budget before the end of next week, either with or without Republican support, to avoid the brinksmanship of a possible government shutdown like the one that occurred in 2017 under Republican Gov. Paul LePage.

Sen. Peggy Rotundo, D-Lewiston, said in a written statement that the baseline budget would continue funding commitments for education, property tax relief and health care. The second budget bill would include any new spending initiatives from legislators and the governor.

Rotundo said the approach would provide stability to businesses and residents.

“Passing a targeted continuing services budget now will provide our families, schools, municipalities and business community with the stability they deserve, building on the bipartisan work Democrats and Republicans continue to do on this committee,” Rotundo said. “It will also give the Legislature the space and time to continue working in a collaborative and productive manner on any new initiatives and programs in the coming months.”

Republican leaders in the House and Senate did not respond to interview requests about whether they support the approach announced by the Democratic co-chairs.

The committee began voting on budget items Thursday evening, with initial votes on education, veterans and pubic safety line items winning unanimous approval.

Prior to voting, Sen. Rick Bennett, the only Senate Republican on the budget committee, sounded cautiously optimistic about the approach, but added “we have a ways to go.”

“We know that not everything important to the entire Legislature is reflected necessarily in the committee here, so we have to hear from others too and that will be an important part of culminating a successful conclusion on the Part I current services budget,” said Bennett, R-Oxford. “But I am very optimistic we will get there. There are other pieces we may not get to tonight that will have to be considered and dealt with as well. I’m grateful for the collaboration and the spirit we’re all working towards here.”

A spokesperson for the governor did not directly comment on the Democrats’ announcement, but said the governor would continue working with both parties on the budget.

“Ensuring the continuity and stability of government services that Maine people rely on every day is a priority shared by many Republicans and Democrats in the Legislature,” spokesman Ben Goodman said. “The governor will continue to work with Democrats and Republicans alike to move the budget process forward.”

The current state budget is $9.4 billion, according to the administration. The state’s nonpartisan revenue forecasting commission has predicted the state will take in $10.5 billion in the next biennium, though a new revenue projection will be released in the coming weeks.

If Democrats use the current budget as a baseline, lawmakers would still need to debate what to do with another $1 billion in revenue, because the state is constitutionally required to balance its budget.

Passing a budget before next week could be done with a simple majority, which the Democrats have in both the House and Senate. Such a budget would take effect 90 days after passage, so it would need to be done by April 1 to ensure government operations will be funded when the next fiscal year begins on July 1.

Budget approval after April 1 would require the support of two-thirds of the Legislature to avoid a shutdown. Reaching that threshold would allow the budget to take effect immediately after the Legislature adjourns.

Republicans, who have made tax cuts a top priority this session, have become increasingly concerned that Democrats would use their majority to push through a partisan budget.

Senate Minority Leader Trey Stewart, R-Presque Isle, said Tuesday that “all signs” were pointing toward Democrats passing a majority budget – such a move would be “a tremendous blow to the institution that is the Legislature and the process we are supposed to be utilizing,” he said.

The move to divide the budget has recent precedent. Democrats passed a majority budget during the pandemic, while lawmakers continued working on a change package to allocate additional revenues that ultimately won bipartisan support.

The 131st legislative session began with a confrontation over a winter heating and energy relief plan, which included a round of $450 checks to many taxpayers. That bill was negotiated by incoming leaders from both parties and the governor before lawmakers were seated, but was delayed when Senate Republicans withheld support, citing a lack of a public hearing.

After that hearing was held, a few Republicans joined Democrats to approve the bill, without any changes.

While the bill passed, it was seen as a harbinger of the biennial budget negotiations that are now taking place.

Mills, meanwhile, has said she would like to provide stability to state residents and avoid drama, especially any threat of a government shutdown. She is facing calls from her own party to increase spending on services and programs, but she has expressed interest in working with Republicans on a bipartisan budget. She has also ruled out any tax increases.

Mills convened a meeting of legislative leaders and budget negotiators from both parties in each chamber Tuesday to discuss the status of budget talks.

Lawmakers were tightlipped about what was discussed in that meeting, some joking that they were “sworn to secrecy.”

Rep. Sawin Millett, R-Waterford, suggested there was at least some agreement about future steps.

“I think we made a lot of progress in terms of agreeing to work together, rather than separating,” said Millett, a longtime lawmaker and the lead Republican on the budget-writing committee. “The parties kind of outlined the first step and then we’ll talk about the next step and keep going.”

Mills was also optimistic, according to a spokesperson.

“The governor felt the meeting was positive and productive, and she appreciated the engagement from leaders of both parties and both houses,” Goodman said. “She will continue to work with them in the coming days to discuss potential avenues to move the budget forward.

Lawmakers would still need to take up a cap on state spending.

That spending cap was enacted nearly 20 years ago as a way to control state and local spending once the state began providing 55% of the education costs in public schools. The Legislature met that school funding mark in the previous budget, triggering the cap in the next two-year spending plan.

But Mills’ budget proposes to rewrite that law and change the formula used to set the cap. The change would allow Mills to increase the state budget by about $900 million instead of being limited to an increase of $400 million to $500 million.