Governor Mills’ budget change package — which amends her prior budget proposal to align with more current revenue projections — lays a solid foundation for Maine. It provides communities with more of the stability they need to flourish by funding priorities such as housing development, homelessness prevention, and energy relief.
The needs addressed by the change package are critical, and the funding to address them is sorely needed and should not be compromised by continuing to fund ineffective tax giveaways for out-of-state businesses. However, the Governor’s proposal falls short when it comes to making investments that could be transformative for Maine families and economy. Maine Center for Economic Policy encourages Maine legislators to prioritize investments that create a state paid family and medical leave program, modernize the state’s child tax credit, and support the child care industry.
Governor’s change package addresses some urgent needs
The Governor’s proposed additions will boost families’ financial security and enable more Mainers to find and remain in safe, affordable housing. Providing funding for immediate housing needs and long-term residential development will help set Maine’s economy up for future success and growth. The change package proposes several key investments:
- $80 million for affordable housing development would put Maine on a path to reduce the shortage of affordable housing across the state which currently threatens the health and wellbeing of Maine families and the stability of Maine’s economy.
- $15 million for the Low-Income Assistance Program would help Mainers with low income afford their energy bills which have skyrocketed over the past two years, helping more Mainers to remain stably housed.
- $12 million for emergency housing assistance would help support the thousands of Mainers experiencing homelessness. Additionally, creating a Housing First program would help Mainers experiencing chronic homelessness get into stable housing and back on their feet.
Legislators have a chance to make transformational investments
Despite the welcome additions in the Governor’s proposal, now is the time to address some of the structural challenges that have been keeping Maine’s families and economy from reaching their potential. Going forward, legislators should prioritize the following investments in the upcoming budget:
- Funding the creation of a state paid family and medical leave program. Providing paid family and medical leave has demonstrated significant benefits to parents, newborns, small businesses, and the broader economy. Given the likely temporary high revenues Maine is experiencing, now is the perfect time to fund the up-front costs of a state program.
- Modernizing the state’s Dependent Exemption Tax Credit by increasing its value, indexing it to inflation, and removing the minimum income requirement. Maine’s child tax credit, the Dependent Exemption Tax Credit, helps families afford the essentials like rent, groceries, and child care that allow them stay in the labor force. This support also benefits the greater entire economy. Every dollar spent on the expanded federal Child Tax Credit generated a $10 return on investment to society. Not updated since it was created in 2017 and still including minimum income requirements, the current Maine credit fails to reach children in most need of financial resources.
- Offsetting the high cost of child care for families with low income by stabilizing the workforce and making subsidies available to more families. A lack of affordable child care prevents many parents from returning to the labor force. While the governor’s proposal includes a $4 million expansion of the state Credit for Child Care Expenses, there are more effective ways to make child care more affordable. Because this credit is linked to receipt of the federal version of the credit, which is subject to a minimum income requirement, it is effectively inaccessible to families with low income. The credit is also ineffective because it only reimburses families for child care expenses after the fact, providing no meaningful benefit to families who cannot afford the up-front costs of child care. Legislators should instead pursue solutions that increase wage supplements for workers and better align child care reimbursement rates with the actual cost of care. Legislators should also expand access to subsidies, enabling more parents to reenter the workforce and provide for their families.
And ensure available resources aren’t squandered on handouts to corporations
Notably absent from the Governor’s change package is funding to pursue additional priorities determined by the legislature. The proposal leaves only $12 million unallocated, hardly enough to cover the pressing needs of Maine communities. Despite this, the change package does include funding for the Dirigo Business Incentives Program. Overwhelming evidence shows business tax incentives are often poorly targeted to achieve intended outcomes. By increasing business subsidies — potentially to some corporations that may not pay their fair share in taxes — the Dirigo Business Incentives Program siphons funding from far more pressing needs.
The change package currently includes $4.6 million for the incentive program, but this cost will almost certainly balloon over time as more businesses try to claim it. Instead of pursuing poorly evidenced giveaways to corporations, public funding should be spent more responsibly on meeting the needs of Maine families.
Legislators can build on recent economic successes and put Maine on an even better path toward shared prosperity
The Governor’s change package is a promising start for discussions on the biennial budget. By providing significant investment in affordable housing solutions, the proposal demonstrates a strong commitment to meeting the needs of Mainers. Maine Center for Economic Policy encourages legislators to build on it and prioritize investments that put working families on stronger footing and make it possible to achieve greater security now and in the future.