While many praised the overarching goal of Gov. Janet Mills’ proposal to address the state’s immediate Medicaid funding needs, other aspects of the supplemental budget — and what was left out — drew sharp criticism during public hearings this week. 

One of the proposals that received pushback is a plan to limit General Assistance, which helps municipalities pay for basic necessities for those who can’t afford them. Other components were met with skepticism, such as allocations to help cover the cost of premiums for the state’s new Paid Family and Medical Leave program that started this month. 

However, the majority of public testimony drew attention to something left out of Mills’ budget proposal.

Nonprofit providers of programs for seniors and adults with intellectual and developmental disabilities said the administration only notified them in December that anticipated Jan. 1 cost-of-living adjustments for Medicaid would not be coming, a move they argued is a violation of state law. As a result, providers from across Maine urged lawmakers to restore those adjustments by including them in the supplemental budget.

MaineCare, the state’s Medicaid program, is facing a $118 million funding gap in the current fiscal year. That gap was the impetus for the governor’s change package, which includes $117 million for the explicit purpose of closing it.  

Kirsten Figueroa, commissioner of the Department of Administrative and Financial Services, warned in a letter to the Appropriations and Financial Affairs Committee and legislative leaders earlier this month that payments to health care providers may be limited if the Legislature doesn’t enact immediate budget changes. Benjamin Mann, deputy commissioner of finance for DAFS, said on Thursday that there is enough funding to continue payments roughly until May.  

Various legislative committees joined the Appropriations Committee, which sets the budget, the hearings and will report back their recommendations in the coming days. The budget committee will then get to work creating its own proposal, taking the feedback from the public and committees into account. 

What’s not included, but health care providers argue should be

Like many who provided testimony during a joint hearing before the Appropriations and Health and Human Services committees on Thursday, Eric Meyer, president and CEO of Spurwink Services, said the one-time MaineCare funding is crucial to ensure services continue.

Gov. Mills administration calls for urgent budget changes to address Medicaid gap

However, Meyer also urged the committees to consider the impact of a separate but related decision by the Mills administration to suspend MaineCare cost-of-living adjustments, known as COLAs, in ongoing budget discussions, despite the Legislature previously enacting a law requiring such adjustments. 

Providers said they had expected at least a 2.5% cost-of-living increase on Jan. 1.

“This decision came as a shock to us and our colleagues across the state,” Meyer said. “After years, sometimes decades, of neglect, COLAs enable MaineCare reimbursement rates to begin catching up,” Meyer said. “Considering the ongoing behavioral direct care workforce challenges, COLAs are invaluable to meet the behavioral health needs of our state.”

Last year, the Maine Center for Economic Policy in partnership with the Maine Council on Aging released a report that found sizable gaps already exist between care needed and what’s available for seniors and adults with intellectual and developmental disabilities in Maine.

This suspension of COLA adjustments was also of concern to Laura Cordes, executive director of the Maine Association for Community Service Providers, who said annual COLAs have been “nothing short of a lifeline,” helping with worker retention as well as preventing program closures. 

“We’ve made tremendous progress creating a sustainable and transparent rate setting system,” Cordes said, referring to the law to require regular adjustments. “Now is not the time to step back. I understand you have difficult decisions to make. I urge you to uphold the state’s commitment to the direct care workforce and the folks that we serve.” 

While the text of the legislation has not yet been published, House Speaker Ryan Fecteau (D-Biddeford) has separately filed a bill to help Maine grow the direct care workforce, in part by setting higher reimbursement rates to allow nonprofits to pay 140% of the minimum wage.

In addition to advocating for the COLA increases, Marge Kilkelly, legislative liaison for the Maine Council on Aging, urged lawmakers to consider adding funding for programs aimed to help seniors. 

Three out of five regional agencies on aging have wait lists for Meals on Wheels, which delivers meals to homebound seniors, with some residents in rural Aroostook County having to wait up to a year before receiving meals, Kilkelly said. 

“Most do not have adequate resources to meet their basic needs,” Kilkelly said. “Imagine being older, alone, unable to make a meal, swallowing your pride to ask for help, only to hear that you have to wait a year for that help to arrive. This is unacceptable and the current wait list for Meals on Wheels should be quantified and included in the supplemental budget.”

General Assistance 

The proposed cuts to General Assistance would limit housing assistance, except for temporary housing and emergency shelters, to a maximum of three months per household over one year. It would also limit municipalities from exceeding the maximum levels for all assistance categories for no more than 30 days per household over one year. 

Kathy Kilrain del Rio, advocacy and programs director at Maine Equal Justice, argued these cuts would result in more people becoming unhoused, an already persistent issue in the state. 

“Part of the requirement for utilizing General Assistance is that you need to have exhausted all other potential resources,” Kilrain del Rio told Maine Morning Star, referring to state and federal programs as well as community support such as local nonprofit or church programs. 

“So for someone to need help at that point, they really have no other option,” she said.

Andree Appel and Carol Kalajainen, respective chair and vice-chair of MidCoast New Mainers Group, submitted testimony on how the proposed limits would hurt immigrants in particular. 

“The current system creates barriers to stability for asylum seekers who need temporary assistance until they are able to work, barriers not of their own making,” they wrote, referring to the restriction under the Immigration and Nationality Act that asylum seekers have to wait 180 days after filing for asylum to obtain a work permit. 

Processing delays often extend this waiting period to a year or more, they added.  

Mann, the deputy commissioner of finance for DAFS, said projections do not indicate General Assistance changes are needed in the current fiscal year, so lawmakers asked him whether the department would be open to moving the issue into the biennial budget. 

“We would not have any concerns about that,” Mann told lawmakers on Thursday.

Health care cuts

Department of Health and Human Services Commissioner Sara Gagné-Holmes explained to the Appropriations and Health committees on Thursday that the Mills administration’s approach to cuts included: “rolling back programs and/or funding that are not implemented yet, rolling back programs and/or funding that are still new or only recently implemented, and looking to other states and national averages, as a reference point to assess the level of support currently provided by programs in Maine.”

One of those cuts is repealing a bipartisan law that passed last year to provide $4.2 million in one-time funding for federally qualified health centers to expand pharmacy services and make affordable prescription drugs accessible for patients. 

Darcy Shargo, CEO of the Maine Primary Care Association, which represents Maine’s largest primary care network, said its members had been anticipating those funds would be available in May based on the group’s last conversation with the administration in December.

“We ask the Legislature to reverse this cut and not balance the budget on the back of Maine’s healthcare safety net,” Shargo said. 

Other cuts in the health department’s purview include suspending plans for mental health law enforcement liaisons and crisis receiving centers in Kennebec and Aroostook counties that lawmakers approved last year, which are facing further cuts in the biennial budget, as well as reducing funding for the Office of Violence Prevention, among other programs.

Free community college 

In addition to a $25 million investment the governor has proposed in the biennium budget to make the state’s free community college program permanent, Mills proposed a $7.3 million allocation to the community college system for the current fiscal year.

During a joint hearing of the Appropriations and Education committees on Wednesday, David Daigler, president of the Maine Community College System, defended this immediate allocation as necessary to keep the state’s commitment to 2020 to 2024 high school graduates.

“As it turns out, the pent up demand for Maine’s high school students who wanted an education but felt they could not afford it, or they just needed a little push from the word ‘free,’ that demand far surpassed our estimates,” Daigler said.

Daigler said they predicted 8,000 students would use the program initially. More than 12,000 students took advantage of the program during its first two years and 17,151 have now used it. 

Daigler fielded several questions from Republican lawmakers, including Sen. James Libby (R-Standish), who asked for data about the number of students who have graduated from high schools outside of Maine, established residency in Maine and then accessed the free community college scholarship. 

While promising a detailed breakdown during the upcoming work session, Daigler said about 96% of students who are using the program had always lived in Maine. He added that the option for new residents to also use the program was an intentional part of the law to attract new people to the workforce. 

Adjustments for Paid Family and Medical Leave

The supplemental would also provide funding to colleges and universities to help cover the costs related to the state’s new Paid Family and Medical Leave Program, which took effect on Jan. 1.

Mills proposed $209,609 to cover the state-supported positions at Maine’s community colleges impacted by the program.

“When the Paid Family Medical Leave legislation was passed, the Legislature allocated funds to cover the state’s share of those costs,” Daigler said during a hearing on Wednesday. “However, no funds were allocated to Maine’s public institutions of higher education.”

The law, which passed in 2023, included a general fund appropriation of $984,444 and a highway fund allocation of $272,075 in fiscal year 2025 to support the state’s share of the premium contributions for the benefits.

The supplemental also includes funding for the University of Maine and the Maine Maritime Academy to support the program premiums. 

Jenny Boyden, associate commissioner of DAFS, said the agency proposed this as a way to provide support to the university systems without increasing general fund appropriations. However, Jacob Lachance, government relations specialist for the Maine State Chamber of Commerce, raised concern about future budget strains if this funding structure is used “in perpetuity.”

Taxes 

The supplemental proposal includes some “right sizing,” Figueroa explained before a joint hearing of the Appropriations and Taxation committees on Wednesday.  

The plan reduces funding for the Homestead Property Tax Reimbursement Program by $14 million in the current fiscal year because the current appropriation is more than what’s needed.

The supplemental budget would also provide about $1 million to make final reimbursements to municipalities under the Property Tax Stabilization Program, which only existed for one year, starting in April 2023. 

The plan also seeks state conformity with the federal Internal Revenue Code. 

Each year, the Legislature reviews amendments to the code from Congress to determine whether Maine will conform, and one federal tax law enacted in 2024 would have a meaningful impact on Maine tax receipts if the state adopts it. 

On Dec. 12, 2024, former President Joe Biden signed the Federal Disaster Tax Relief Act of 2023 into law, which among other things eliminated the requirements that disaster-related losses must exceed 10% of a person’s adjusted gross income before becoming deductible. 

Because the federal legislation is retroactive and impacts the upcoming tax filing season, this was included in the supplemental budget as opposed to stand alone legislation, Figueroa said. 

Rep. Shelley Rudnicki (R-Fairfield) asked if people in her district whose properties flooded during last winter’s storms could deduct those losses if the state conforms. Michael Allen, associate commissioner for tax policy, said any casualty losses exceeding $500 can be deducted and that conformity would allow for back filing for the storms in late 2023 and early 2024.