DAFS Commissioner Urges Smart, Timely Investments & Budget Prudence in Supplemental Budget Testimony Before Appropriations Committee

AUGUSTA, Maine – Commissioner of the Department of Administrative and Financial Services (DAFS) Kirsten Figueroa today outlined Governor Mills supplemental budget proposal before the Joint Standing Committee on Appropriations and Financial Affairs, highlighting the Administration’s proposed investments that address the urgent needs of Maine people; new initiatives for public safety and mental health legislation; and the need to save money for future expenses.

Commissioner Figueroa’s testimony outlined the need to establish a reserve account of $107 million to set aside for upcoming expenses in next biennium, including the need to maintain support for already enacted initiatives and a flattening of state revenues.

“All of this to make the following simple points: 1) General Fund revenues have been reduced; 2) costs are increasing; and 3) revenues are plateauing,” said Commissioner Figueroa. “If we do not budget responsibly now – or, to put a finer point on it, if the Legislature chooses not to save this reserve funding and, instead, appropriates it – then the Legislature will be forced to make painful cuts in the future to programs that Maine people value. We need to look no further than other states facing budget shortfalls now, like New York, Maryland, Massachusetts, Indiana, and California:  realizing their runways are too short. We do not want that to happen to us.”

“Taking into consideration all the factors I just laid out for you, the Governor believes it more appropriate for the State to budget prudently now by focusing on maintaining the commitments it has made to Maine people to the greatest extent possible, rather than jeopardize them,” she continued.

The Commissioner highlighted past initiatives from the Administration with support of the Legislation including many covered in the current biennial budget that will be ongoing into the future:

  • Funding K-12 cost of education at statutorily required 55 percent;
  • Funding revenue sharing at statutorily required 5 percent;
  • More than $800 million all funds for Medicaid and provider rates, including salary increases for direct care workers;
  • School meals for all kids;
  • Medicaid expansion, including expanding children’s coverage;
  • Historic child care investments;
  • Investments in behavioral health, child and family services, elder issues; and,
  • Investments in housing, including short-term emergency shelters and building more long-term housing, among many others
  • Strengthened Highway Bridge Capital Funding by transferring certain sales tax revenues, estimated at more than $100 million per year to the Highway Fund
  • Growth in personnel costs as a result of 24.1 percent in wage increases since 2019 which adds $511 million all funding ongoing for future biennial budgets
  • And many others.

Additionally, one-time General Funds were designated to fulfill significant needs for Maine people including:

    • capital funds for workforce housing;
    • PFAS remediation;
    • free community college;
    • climate resiliency efforts;
    • ensuring state owned buildings are safe for those who work and visit them;
    • drinking and wastewater treatment infrastructure;
    • and more than $1.3 billion of pandemic and inflation relief

The Commissioner also outlined cumulative Tax Relief enacted between January 2019 and July 2023 that is estimated to reduce the General Fund revenue by $285 million in fiscal year 2025 and an estimated $750 million for the 2026-2027 Biennium. This is in addition to indirect property tax relief through municipal revenue sharing and education funding being fully funded at statutory requirements of 5 percent and 55 percent, respectively. For instance, municipalities are now receiving approximately $155 million more in revenue sharing each year as a result of the full 5 percent versus the 2 percent of 2019.

The Commissioner said that rather than draw from a one-time source for ongoing needs, the administration “was setting aside $107 million of current funding to ensure we can continue the progress made, keep our checkbook balanced, and maintain the State’s good fiscal footing.”

Commissioner Figueroa also made a clear distinction between the Budget Stabilization Fund and the $107 million reserve account. The one-time Rainy Day funds should not be used to cover long-term, ongoing funding. The Budget Stabilization Fund is intended to cover General Fund revenue shortfalls as a result of an economic downturn. It can also be accessed for emergency situations. For example, if approved by the Legislature, the Governor proposed to use $50 million of these funds for recovery efforts from the destructive storms of December and January.

The Commissioner also outlined initiatives covered in the supplemental budget through $71 million in net appropriations, which would bring the General Fund budget from its current $10.34 billion to $10.41 billion; and in $117.5 million in one-time transfers, funding that would address urgent needs that the State should and can address in a financially sustainable way including:

  • to improve public safety and strengthen Maine’s mental health system;
  • to cover the state’s share of federally declared disaster recovery;
  • to help communities identify and strengthen infrastructure vulnerable to extreme weather;
  • to repair storm damage to Maine State Parks, historic sites, and public lands;
  • to Maine milk producers in recognition of increased production costs;
  • for final payments to municipalities to close out the Property Tax Stabilization Program for Seniors;
  • for the Maine Commission on Indigent Legal Services to transition unused money to expand the network of public defenders in Maine; to create an Office of Community Affairs;
  • to upgrade the Judiciary’s computer systems; to streamline, simplify, and modernize certain provisions of the sales tax to better align it with the practice of other states across the country;
  • for the Maine Department of Education’s proposal to improve Child Development Services; and
  • for investments to build housing, improve child safety, and fight the opioid epidemic.

Commissioner Figueroa’s complete testimony before the Appropriations Committee can be read HERE.

The AFA Committee will begin a series of work sessions to decide the final specifics of the Supplemental Budget. The Governor’s Recommended General Fund Supplemental Budget 2024-2025 can be found HERE.