AUGUSTA — A little-known piece of a $140 million budget-balancing package that a legislative committee endorsed unanimously early Wednesday morning drew fire later in the day from Gov. Paul LePage and the Maine Heritage Policy Center.

What LePage described as a tax increase is one reason the governor finds the Appropriations Committee’s proposal “unacceptable,” said his spokeswoman, Adrienne Bennett.

The policy center blasted Republican legislators for working with Democrats to find a compromise.

“Now it appears this dynamic of cordiality has so blinded members of the Appropriations Committee that they are considering the unthinkable — using a tax increase on working Mainers to avoid making common-sense changes to Maine’s welfare system,” said Lance Dutson, the group’s chief executive officer. “This is an outrageous dereliction of the GOP mandate, and one that will not be suffered lightly by the already-suffering taxpayers of this state.”

On a day when weary Appropriations Committee members worked to explain the budget to fellow lawmakers, the criticism raised the possibility that the Legislature will reject the plan to close a budget shortfall in the Department of Health and Human Services.

Still, Democratic and Republican leaders said they are cautiously optimistic that the $140 million compromise, approved unanimously by the 13-member committee at 1:20 a.m. Wednesday, will win legislative approval.

The issue raised by LePage and some conservative lawmakers involves the continuation of a tax on paid insurance claims that goes to support the state’s Dirigo Health insurance program.

Rather than reducing the rate as scheduled, the Appropriations Committee voted to keep the tax at its current level for an additional year to raise $5 million. The rate would stay at 1.87 percent through June 2013, rather than drop to 1.64 percent.

Sen. Roger Katz, R-Augusta, a member of the committee, said continuing the tax at its current level would not constitute a tax increase.

“I know the snipers will keep sniping, but compromise is not a dirty word,” he said in response to the policy center’s email. “Those of us on Appropriations are proud of the budget we voted out.”

The budget needs support from two-thirds of lawmakers in the House and Senate to take effect right away — something that LePage says is essential. Legislative leaders say that appears to be within reach.

“Everyone’s modestly happy and modestly unhappy,” said Assistant House Majority Leader Andre Cushing, R-Hampden. “There are some elements of our caucus that wished for a closer version to the governor’s bill, while others were concerned about the tremendous impact this would have on a tremendous number of people in a short period of time.”

Contrasting the position of the governor and the Maine Heritage Policy Center, those who provide services to the poor said they are concerned about a provision in the committee’s proposal that would end Medicaid health insurance for 14,000 low-income parents as of Oct. 1.

Rep. Peggy Rotundo, D-Lewiston, the ranking Democrat on the committee, said she and other Democrats tried to preserve coverage for the parents. Because of the need to compromise, they were unable to continue the coverage for parents whose incomes are above 133 percent of the federal poverty level.

For a single parent with one child, that would mean buying health insurance on an income of $19,564 a year, said Sara Gagne-Holmes, executive director of Maine Equal Justice.

“People who are uninsured die much sooner from preventable disease,” she said. “That’s the tragedy of this compromise.”

A compromise that would phase out, rather than eliminate, health insurance for childless adults worries LePage, who said it doesn’t go far enough to reform the state’s Medicaid system.

LePage, who on Monday threatened a veto if the budget didn’t eliminate the program, did not speak to the press about the issue Wednesday. Bennett said he finds parts of the negotiated deal unacceptable, but she did not say whether the governor would veto it.

“We do know a significant piece of this bill is unacceptable to him,” she said. “There are not the structural changes needed to fix this welfare system.”

When lawmakers arrived at their desks Wednesday, they received a one-page letter from LePage. As he did in his State of the State address, he wrote that Mainers earn less than workers in other states, yet spending on “welfare benefits” is above the national average.

“I ask all of you, where is the outrage?” he wrote. “Maine’s Medicaid program has grown at an unsustainable rate, and spending is out of control.”

In December, LePage proposed $221 million in cuts to the state’s Medicaid system, called MaineCare, to get the program through this fiscal year, which ends June 30, and the next year. That would have eliminated coverage for 65,000 people.

Since then, the Appropriations Committee has decided to delay action on about $84 million involving the more controversial cuts.

The proposal approved Wednesday would phase out health insurance for childless adults by freezing enrollment, which would save money through attrition and reduce benefits in future years. The plan would save $11 million.

LePage proposed saving $22 million by eliminating the program immediately, which would have left 18,600 Mainers without health insurance.

The $140 million in the committee’s proposal bill includes $59 million that would come from moving money from the next fiscal year to this one, $20 million that would come from Dirigo Health and hospitals, $11 million that would come from the coverage changes for childless adults, and $11 million that would come from collecting overpayments to MaineCare providers.

Democrats and Republicans in the Legislature said Wednesday that no one is fully happy with the compromise, but both sides got some of what they wanted.

“It pays the bills,” said Sen. Richard Rosen, R-Bucksport, the Appropriations Committee’s Senate chairman. “It balances this budget. It has ongoing structural reform in MaineCare programs that’s significant.”

House Minority Leader Emily Cain, D-Orono, said the committee made significant changes to what LePage proposed.

“We landed in a unanimous place that I believe is a good product,” she said.

Susan Cover — 620-7015

[email protected]


Highlights of the $140 million budget-balancing package endorsed by the Appropriations Committee:

$59 million by borrowing from next fiscal year to this fiscal year

$10 million transfer from Dirigo Health

$10 million in cuts to hospitals

$11 million in savings from MaineCare coverage for childless adults

$11 million by collecting overpayments to MaineCare providers

Highlights of an additional $25 million in cuts to balance the budget in the 2012-13 fiscal year:

$3.2 million in reduced payments to hospitals

$2.3 million from the University of Maine System

$2.2 million to eliminate a program that helps at-risk youths

$2 million in cuts to DHHS contracts


$40 million to $60 million that would have come from the closure July 1 of private non-medical institutions, which are residential and group homes for the elderly, disabled and people with substance abuse addiction.


An $84 million shortfall will have to be resolved in the coming weeks. Here are some potential cuts:

$37 million saved by getting waivers from the federal government to cut MaineCare programs

$25 million in cuts to the Fund for a Healthy Maine, the state’s tobacco settlement fund

$5 million in cuts to Head Start


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