Gov. Mills unveils new spending plan to address housing shortage, homelessness and other needs

Gov. Janet Mills announced a new package of spending proposals Wednesday that would use increased tax revenues to address the state’s housing shortage, homelessness, food insecurity and other issues.

The governor’s final spending proposal for the next two years totals about $900 million and reflects the latest projections that the state will collect $294 million in additional revenue over the next two years.

The proposed changes, which will be reviewed and likely amended by the Legislature, increase Mills’ overall two-year budget proposal from $10.28 billion to $10.32 billion, her office said in a statement. It includes new programs that were part of Mills’ original budget proposal but that were not included in a partial, baseline budget that Democrats passed in March.

The change package does not include any concessions to Republicans, who quickly renewed calls for tax cuts amid historic revenues and surpluses. It leaves $12 million in anticipated funding to be allocated by lawmakers.

“This proposal lives within our means, using revenues in a responsible way to address serious, pressing issues – like the housing crunch, homelessness, and food insecurity – while also making thoughtful, strategic investments that will strengthen our economy and make Maine a better place to live in the long run,” Mills said in written statement.

The change package comes more than a month after Democrats passed what they called a continuing services, baseline budget that pays for existing services and bills already enacted by lawmakers. That budget passed along party lines, with Republicans opposed, because of the lack of any commitment to tax relief.

Republicans are backing a plan to reduce the income tax rate for the first $24,500 of income from 5.8% to 4.5%, which would cost about $200 million. Opponents, however criticized the plan, saying it would benefit higher-income earners as much as lower-income families.

Republicans doubled that demand to $400 million in response to another projected surplus from nonpartisan revenue forecasters in late April.

“The proposal fails to give any tax relief to low- and middle-income working Mainers,” House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, said Wednesday. “It fails to adequately address retirees’ cost-of-living increases, but prioritizes over 350 new positions to an already bloated state government. This proposal is severely lacking.”

In a joint statement issued later Wednesday, Republican lawmakers said: “We don’t find the governor’s change package responsive to the times, or responsive to the needs of the Maine people.”

The package, combined with the portion of the budget already adopted, allocates more than $10.3 billion of the projected $10.8 billion in revenue the state is expected to take in over the next two years. Under Mills’ proposal, $455 million of the anticipated revenues would be transferred to non-General Fund accounts, such as the Highway Fund, and are not counted as part of the core state budget.

A spokesperson for Senate President Troy Jackson, D-Allagash, said the proposals are “a good framework” for the budget-writing committee and that Jackson looks forward to learning more about proposals that touch on his caucus’ top priorities: child care, emergency medical services and housing.

Details on the change package were not available Wednesday, but a statement from the governor’s office said that it increases the amount of funding for affordable housing, from $30 million to $80 million. And it also includes the creation of a Housing First Fund, which aligns with a fund already recommended by a legislative committee.

It includes $10 million for a new Innovation Fund for Attainable Housing, which could support housing for people earning between 80% and 120% of area median income, mixed-income housing and in-law apartments, or accessory dwelling units.

AID FOR EMS

Mills also is proposing a one-time allocation of $31 million to help struggling emergency medical services throughout the state. The grants would be used to “ensure continued access to high-quality emergency medical services,” her office said.

Another $12 million is being proposed for emergency shelters and $2 million in one-time funding is proposed for a “food hub capital investment grant,” which her office says will result in 10,000 prepared meals a day for homeless people and food-insecure people.

Other one-time funding proposals include: $50 million for the School Revolving Loan Fund; an additional $22 million for drinking and wastewater improvements that brings the total to $36 million; $19.8 million for a one-time cost-of-living adjustment to state pensioners; and $10 million to prevent road washouts and to protect coastal areas from storm surges.

Another $4 million in ongoing funding is proposed to double a tax credit that helps offset child care costs for working families. The average benefit for the Credit for Child Care Expenses would increase to $360.

And $3.2 million in ongoing funding would create four new trial court judgeships and associated support, such as clerks and security, to help ease the case backlog.

The change package is buoyed by higher-than-expected sales and income tax collections, which have driven previous budget increases.

Last month, the state’s nonpartisan revenue forecasting commission estimated that the state would collect $294 million more in revenue than previously thought. They expect revenues to flatten, but not decline, in future years.

Over the last few years, the state’s revenues have grown 35% from nearly $8 billion in 2020-21 to an estimated $10.8 billion in 2024-25.

The governor did not announce any additional tax relief measures, although the announcement highlights the several rounds of direct checks her administration has sent, including the most recent round of $450 checks this year at a cost of $474 million.