Testimony on LR 2067 (Governor’s Biennial Budget) Parts Regarding Public Assistance and Eligibility

As the Committees and Legislature review the proposed budget, it is important to acknowledge the significant context in which this budget is proposed: the persistent high unemployment levels caused by the worst national recession in our lifetimes. An estimated 100,000 Maine residents are still either unemployed, discouraged from seeking employment or underemployed. There are also large numbers of Mainers working for wages below the level required to meet basic needs. The Maine Department of Labor estimates there are at least 2.3 people seeking work for every job opening and more than 10 for some occupations like food services. On average, only 31% of those counted as unemployed by the most common definition (over 51,000 presently) actually receive unemployment benefits. TANF and General Assistance become programs of last resort. Indeed, they are the only state financed programs that prevent people from falling into hunger and homelessness when they have no other income.

In the 1980s Maine increased AFDC (the predecessor to TANF) benefits modestly ten times within ten years, keeping pace with inflation better than most states. However in the wake of the 1990-1991 recession, the legislature cut AFDC benefits five times between 1991 and 1994. In 1995, in anticipation of federal welfare reform which became effective in 1997, the state changed many rules to help recipients to gain education and employment. The program rules have not substantially changed since.

The caseloads dropped from the vicinity of 25,000 to 12,000 and remained close to that level until they rose modestly to 13,700 in FY 2004 and again in FY 2010. The maximum TANF benefit was last increased in 2001 and today is $485 for a family of 3, still the lowest in New England. State General fund expenditures for TANF rose from $19.5 million (when they were lower than usual because of collected support payments from absent parents) to $23.2 million in FY 2006, and $25.1 in FY 2009, FY 2010, and FY 2011. In 2010 this amount was just 1.15% of the whole general fund budget. The Governor’s changes propose to cut the total amount spent by 10%, or $2,707,320 in each year. 

General assistance helps Mainers facing emergencies. As the state gradually required greater uniformity and provided better reimbursement to municipalities in the 1980s, total state expenditures grew to nearly $23 million in 1990, and were then cut to $6 million a year in 1992 and remained close to that for most of the next 20 years. In FY 2004 they dropped to $4.3 million, and rose again to $6.5 million in FY 2006, $6.8 million in FY 2010, and $7.4 million in 2011. This represents just .26% of the total general fund budget. The Governor’s changes propose to cut that amount by 29% or $2,155,946 in each year.

We also believe that the cutbacks in this budget to subsidized health insurance in both Medicaid and the Dirigo program are particularly unfortunate at a time when private sector businesses continue to scale back coverage for their employees. Maine has avoided the national trend of increasing rates of uninsurance precisely by expanding subsidized coverage to low wage working people. Reversing these policy choices will shift costs through hospital and other providers, bad debt and charity care and ultimately onto everyone’s health insurance rates.

Finally, the saddest part of this proposed budget may be the elimination of all program supports for legal immigrants in this state for the first five years they are in the US. Ask the blueberry growers of Washington County, the broccoli growers of Aroostook County, the forestry managers of the North Woods, the egg packing firms of Turner, the chicken packer of Portland, and the apple orchards of Kennebec County about how vital the hard work of immigrant laborers is for their business. Foreign-born immigrants come to Maine legally for work and opportunity just like people from other states. If they are not hired immediately upon their arrival or lose work later due to layoffs or injury or sickness, it is not in the best economic interests of the state for them to become homeless or hungry. Given our declining birth rates and the number of jobs Maine residents appear to be unwilling or unable to fill, we should welcome the energy and exertion of immigrants and treat them just like other residents when they or their families fall on hard times.

The Governor has suggested that this budget represents “shared sacrifice” with “everyone” being hurt. But that is not the case. It is especially disturbing to see these cuts to such a small part of the budget with such harsh impacts on some of the most vulnerable people in our state, while the proposed top income tax rate reduction would bestow significant benefits on households in the top 10% of the income distribution.

These budget cuts make up only a very small part of the shortfall you must fill, and could easily be covered by rejecting the revenue cuts that benefit the wealthiest Maine taxpayers and threaten bigger shortfalls in future years. It would be better for the state’s economy and be in better keeping with our proud traditions of care and common sense to keep our neighbor’s children from sickness, homelessness and hunger. The long-term costs of these minor savings, if you accept them, would haunt us for years to come. 

Christopher St. John, MECEP Executive Director, testifying before the Joint Standing Committees on Appropriations and Financial Affairs and Health and Human Services in opposition to the parts of the Governor’s proposed budget that make changes in eligibility for General Assistance, the Temporary Assistance for Needy Families (TANF) program, and Medical Assistance.