The state budget allows us to make important investments in the future of our state and all Mainers by funding our schools, health care, infrastructure, and communities. As part of her 2024-2025 budget, Gov. Janet Mills proposes modernizing the state’s outdated spending cap.
In addition to requiring a balanced budget every two years, Maine law also says that the budget cannot exceed a spending cap. The formula currently used to determine the spending limit is not based on the needs of Maine people and communities. It restricts the state’s ability to spend money on important priorities and address crises in a timely way. We are bumping up against the spending cap now due to several factors:
- rebuilding state programs after the LePage administration austerity policies
- sudden, high inflation
- higher than expected tax revenues due to a strong economy, particularly for corporate profits and wealthy households
Maine’s budget spending limit was put in place under the Baldacci administration, tying state spending to 2004-2005 budget spending levels and a growth calculation formula.1 The legislature updated the cap in the 2015 budget at the request of the LePage administration when it amended the growth limitation formula and reset the cap based on 2016-2017 budget levels.2 That budget was approved by a bipartisan vote of 3/4 of legislators.3 Mills is proposing to reset the cap again, this time based on current revenue projections. This modernization is the right thing to do, because legislators working on behalf of their constituents today shouldn’t have their hands tied by outdated limits from decades past.
Rejecting the modernization of the cap would lead to massive cuts for popular programs expanded over the last four years — programs that have improved the lives of Mainers, such as education, municipal revenue sharing, and MaineCare. Small towns and big cities across Maine are facing serious challenges like child poverty, the opioid crisis, housing shortages, and lack of health care. It would be irresponsible in the midst of these and other pressing unmet needs to cut the state budget based on an arbitrary and outdated formula.
Blocking the Governor’s proposal will undermine progress and take resources from our communities. Maine Center for Economic Policy urges the legislature to modernize the spending cap, or go even further by eliminating it, so programs Maine workers, families, and communities rely on are never arbitrarily put at risk.
2 http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=HP0702&item=32&snum=127 p.613