AFA Update: Week of March 6-10- ENR, IFS, EUT, Tax, Retirement, Judiciary and ACF


Public hearings on the governor’s proposed budget wrapped up this week.

Environment and Natural Resources

Insurance and Financial Services

Energy, Utilities and Technology (US Broadband info)


State Retirement– The most discussed and well attended hearing. The administration made it clear that the proposal to suspend cost of living adjustments (COLAs) for retirees is intended to make additional payments on the unfunded actuarial liability (UAL) that are currently unnecessary.


Agriculture, Conservation and Forestry

Members of the committee expressed great skepticism at the changes proposed by the governor’s budget in the Department of Agriculture, Conservation and Forestry. “Not going to fly” was one comment.

Next Week

AFA holds public hearings on a handful of bills related to the retirement system. At the end of the week Rep. Farrin’s bill to eliminate benefits for Legislators will be heard.


In addition to its regular workload Tax started discussions about the governor’s proposed budget.

Maine Revenue Services (MRS) and the Office of Policy and Management (OPM) delivered an array of materials:

OFPR tax documents

OPM “impact” of question 2

OPM staff estimate that in the first year of the new policy-

  • Private sector employment will be negatively impacted by 2,400-4,300
  • Real disposable incomes will be negatively impacted by $400- $600 million
  • Maine’s population will decline by 800- 1,400
  • GDP will be negatively impacted by $40-$160 million

These estimates are based on an economic forecasting model. Models are only as good as the data provided to them. In this case every result is based on how many people OPM assumes will leave the state. They have not yet provided an explanation of the basis for those beliefs. Others presented research refuting “tax flight”.

MRS analysis of 3% surcharge– includes a distributional analysis

MRS provided answers to questions posed at the public hearing.

History of tax changes 2011-today

MRS Background materials for governor’s tax proposals– includes distributional analyses

MRS revenue estimates

MRS tax plan vs 3%

Next week

Tax is scheduled to report back to AFA on April 3. Next week is dedicated to work sessions on the proposed budget.


AFA Update: Week of Feb. 27- March 3- State and Local Government, Veterans and Legal Affairs, Labor ,IF&W, and Education


A recurring theme this week was the question of what is an appropriate initiative for budgets and what is a policy choice that is better suited to a standalone bill submitted to the policy committee. Outlining components that will go into determining General Purpose Aid to Local Education (GPA) by school district were also made available.


Appropriations was joined by the State and Local Government committee for public hearings on their portions of the governor’s proposed budget.

Items of note:

  • Moving analytical staff, including the State Economist, from the Office of Policy and Management to the Office of the Commissioner
  • Increased debt service for the Maine Governmental Facilities Authority (MGFA) to support renovations, particularly on the East (AMHI) campus and $6M to further work on the state-owned Dolby landfill in East Millinocket
  • Further MGFA debt authorization to support $100M in construction and maintenance at the University of Maine System (UMS)
  • $10M from unappropriated surplus for the Fund for Efficient Delivery of Local and Regional Services
  • Creation of the Department of Technology Services (DTS) (from the existing Office of Information Technology (OIT)
  • $21M in borrowing for IT infrastructure
  • Allow state facilities to accept contributions for upkeep, maintenance and repair


Joined in the afternoon by the Veterans and Legal Affairs Committee, AFA heard testimony on the following issues among others:

  • Changes proposed by the Ethics Commission to the distribution schedule of funds to the Maine Clean Elections (MCEA) program and a request for $1.7M in additional funding, the testimony also includes scenarios for different situations and a history of transfers to and from MCEA. Members of the public voiced strong opposition to the governor’s proposed funding levels for MCEA
  • The governor’s proposal to essentially deregulate games of chance for charitable organizations, relying instead on local enforcement
  • The governor’s proposal to implement Keno as a game of chance. Presenting the Bureau of Alcoholic Beverages and Lottery Operations (BABLO) Greg Mineo faced skepticism from the committee regarding the appropriateness of this initiative for a budget


The Labor, Commerce, Research and Economic Development (LCRED) committee spent the entire day with Appropriations.

Testimony was offered on the Workers Compensation Commission, the Department of Labor (DOL), Maine State Housing Authority (MSHA), Department of Economic and Community Development (DECD), Professional and Financial Regulation (PFR) and many other smaller agencies.

  • Support was expressed for the full appropriate amount of the Real Estate Transfer Tax (RETT) to the Housing Opportunities for Maine (HOME) fund in the MSHA
  • The Governor’s plan to eliminate the entire $180K appropriation for the Applied Technology Development Centers (ATDC). This successful program supports:
    • Maine Center for Entrepreneurial Development (MCED) – MCED runs an intensive 15-week training program, that has assisted 140+ small businesses. Removal of state funds would also affect MCED’s ability to draw down additional federal funds.
    • Maine Aquaculture Innovation Center (MAIC) – MAIC sponsors and facilitates innovative research and development projects involving food, pharmaceuticals, and other products from sustainable aquatic systems.
    • Target Technology Center at UMaine – Home of the UpStart Incubator, which provides coaching services and support to entrepreneurs in order to build competitive, market-oriented companies.
  • An increase from $25 to $100 per week in the amount an individual receiving unemployment compensation can retain of other earnings without jeopardizing their UI benefits



In a brief public hearing a member of the Inland Fisheries & Wildlife committee shared Commissioner Woodcock’s testimony.

Opposition was voiced by committee members and the public to the elimination of Game Warden and science positions, the elimination of printed rule and law books, and the reduction of miles driven by Game Wardens. The Commissioner attempted to explain the reductions as necessary to maintain the same dollar funding as in the last biennium. No compelling reason was offered for this.


Rescheduled due to a storm EDU joined AFA for a hearing on the K-12 proposals offered by the governor. After two and half hours of testimony from the Acting Commissioner, scratching the surface of the more than 60 changes to the school funding formula proposed by the governor, the committees opted to take testimony from the more than 70 members of the public present to oppose the governor’s plans.

According to data from the Maine Department of Education, calculations show that almost 65% of Maine students live in districts that will see a decline in education funding from the state if the governor’s budget proposal is approved.

Concerns were raised about the looming March 30 deadline for school boards to propose budgets. The governor’s plan to eliminate state support for local school administration was panned. The budget as proposed will result in increased costs to towns of 5% and 10%.

Commissioner’s testimony

Part C breakout

GPA component spreadsheet

MEA Adjusted State Share by district

Supplemental budget

The Supplemental budget, LD 302 was finally enacted and sent to the governor on Thursday. The bill was replaced with the committee amendment.

Next Week

Monday morning public hearings continue with the Environment and Natural Resources committee.


Health and Human Services & final work on the supplemental budget

This week Health and Human Services and Appropriations committee held lengthy public hearings on the governor’s proposed biennial budget, LD 390 An Act Making Unified Appropriations and Allocations for the Expenditures of State Government, General Fund and Other Funds and Changing Certain Provisions of the Law Necessary to the Proper Operations of State Government for the Fiscal Years Ending June 30, 2018 and June 30, 2019.


Morning testimony focused on the non-DHHS departments and agencies under the oversight of the HHS committee.

  • Developmental Disabilities Council
  • Children’s Trust
  • Disability Rights Center
  • Maine Health Data Organization
  • Maine Hospice Council

There was no opposition to these portions of the budget.

The afternoon brought testimony regarding cuts to hospitals and to MaineCare eligibility.

Those items include:

  • Reduce Critical Access Hospital reimbursement from 109% to 101% of Medicare reimbursement- rejected 2011, 2013, 2015
  • Reduce reimbursement for hospital based physicians- rejected 2013, 2015
  • Eliminate health care for 18-19 year olds- rejected by Feds 2012, rejected by courts 2012, 2013, 2015
  • Eliminate health care for parents of children making as little as $6,020- rejected by Feds 2012, rejected by courts 2012, 2013, 2015

Public opposition was unanimous.


Convening at 10:00 AM both committees heard about the administration’s plans to eliminate General Assistance, prohibit support for legally present new Mainer’s, and institute draconian sanctions in the Temporary Assistance to Needy Families (TANF) program.

They also heard lengthy and unanimous opposition to these changes, many of which have been previously rejected by the legislature in one form or another.

  • Eliminate General Assistance- rejected in various forms since 2013
  • Change disability determination period- rejected 2013, 2015
  • Eliminate help for legally present new Mainers- rejected 2011, 2013, 2015

Testimony went into the evening.


Prior to the scheduled public hearing Sen. Breen shared a proposed amendment to the supplemental budget.

Moving on to items related to the administration of the department Alec Porteous, Deputy Commissioner of Finance for the department presented testimony.

Alec shared information about the MaineCare Review process by which the department projects expenditures every six months using object level data. He indicated that this information could be shared with the committee.

Also scrutinized was language providing the department with broad authority to adopt emergency rules to implement programs and changes with very limited legislative oversight. This language was first used in 2009 to allow the department to quickly implement a particular initiative while the legislature was out of session. It has been asserted as “boilerplate” language ever since.

The afternoon focused on cuts to Maine’s public health infrastructure proposed by the governor.

Unanimous public testimony urged the rejection of these proposals.


Supplemental budget

A final work session was held on LD 302, the supplemental budget,. An Act To Make Supplemental Appropriations and Allocations for the Expenditures of State Government and To Change Certain Provisions of the Law Necessary to the Proper Operations of State Government for the Fiscal Year Ending June 30, 2017

The Appropriations committee:

Unanimously adopted Sen. Breen’s proposal to provide $4.8M in state funding for treatment of substance abuse, particularly opiates

Unanimously approved $155K necessary to hold the scheduled June 2017 referendum election.

On a 9-2 vote the committee removed the governor’s proposed $550K to promote diversity at the University of Maine School of Law. Members expressed concern about the appropriateness of addressing this in a supplemental budget.

Members spoke of their disappointment that agreement could not be reached to pay the state’s obligation to provide indigent legal services.

It was also expressed that the policy committee is the proper place to determine the path forward on support for county jails.

The supplemental budget was unanimously approved as amended.

Public hearings

Proceeding with the HHS committee the final day of Health and Human Services public hearings opened with testimony by Deputy Commissioner for Programs Ricker Hamilton.

  • Substance abuse and adult mental health
  • Services for the elderly and disabled
  • Developmental disabilities
  • Children’s mental health
  • Other Children’s services

The Secretary of State testified in opposition to the administration’s plan to transfer responsibility from the Driver Education and Evaluation Program (DEEP) from DHHS to his office.

Jim Martin, Director of the Office of Child and Family Services (OCFS) presented information related to his office including the elimination of state funding for Head Start. A proposal rejected in 2011, 2013,  and 2015.

Though not in the budget as initiatives, the department is poised to implement rate cuts to both Sec. 17 Community Support Services and Sec. 65 Behavioral Health Services. This faced opposition.

The budget does contain another attempt to use estate recovery to claim homes held in joint tenancy to repay MaineCare costs incurred by those older than 55 years of age. This has been rejected at least twice in 2009 and 2010.

Providers, consumers and the families of consumers gave their support for increases in Sec. 29 services.

Monday morning public hearings continue with the State and Local Government committee.

AFA Update- Week of February 13-17: Higher education, Transportation, Criminal Justice, indigent legal and Marine Resources

Appropriations continued public hearing on the governor’s proposed biennial budget.

Tuesday, joined by the Education committee, AFA heard testimony from the administration and supporters of the governor’s plans regarding the cultural agencies and higher education.

Wednesday morning the Transportation committee and AFA heard from the administration on the General Fund impacts of the governor’s proposed budget. Most significant is the proposal to shift 100% of State Police costs to the General Fund.

Criminal Justice and Public Safety participated in the afternoon as the Department of Public Safety (DPS) and Commissioner Fitzpatrick delivered the administration’s proposals regarding public safety and the Department of Corrections (DOC).

Discussion focused on:

  • Plan to reduce professional services(primarily inmate medical) costs by 10%
  • The return of a proposal to shutter Downeast Correctional Facility (DCF).


Members of the public roundly rejected the plan to close DCF.

Discussion of the 10% reduction in medical services revealed that this will be achieved by incarcerating 450-500 fewer people.

Thursday’s public hearing was dominated by opposition to the governor’s renewed plan to replace the current means of providing constitutionally required indigent legal services with a Public Defender’s Office. This proposal was rejected in the last legislature.

Public hearings wrapped up for the week with Marine Resources and testimony on the governor’s proposals for the Department of Marine Resources.

Concerns were expressed about the 30% increase in commercial fishing license fees, the elimination of 9 positions at the department and expenditures on the lobster marketing collaborative.

Appropriations and Health and Human Services committees will hold joint public hearings throughout next week’s break.

Public hearing for taxation items in governors budget

Public hearings on the major tax initiatives in LD 390, the governor’s biennial budget, concluded today with presentation and testimony on the following items:

  • Sales tax expansion
  • Income tax changes,
  • Service provider tax, and
  • Estate tax


Commissioner Rosen described Question 2 as a “double cross” of the legislature, presumably by the voters.

The committees then heard 70 people testify. Some, including business leaders, supported the governor’s proposed delay of the 3% surcharge from Question 2. In some cases those same businesses oppose the governor’s plan to expand the sales tax to certain services and increase the lodging tax to 10%. Large numbers of teachers, retirees and other citizens turned out to oppose the governor’s changes.

Below is a brief history of Maine’s recent income tax rates and the governor’s fully implemented proposal.


Income tax changes since 2011

Status in 2010

< $4,950 = 2.0%

>$4,950-$9,850 = 4.5%

>$9,850-$19,750 = 7.0%

$19,750 or more = 8.5%

Personal exemption $2,850

Standard deduction for married filing jointly  $9,550

2011 changes

< $4,950= 0.0%

>$4,950-$9,850 $9,850 = 6.5%

>$9,850-$19,750 = 6.5%

$19,750 or more = 7.95%

Conform to federal personal exemption amount $3,900

Conform to federal standard deduction for married filing jointly $11,900

2015 changes

$0 ‐ $21,400 =5.8%

$21,401 ‐ $50,000 = 6.75%

$50,001-infinity = 7.15%

Standard deduction for single from $6,100 to $11,600 married filing jointly to $23,200

(Phase out from $70,000 ‐ $140,000)

Proposed 2017 changes

Voter approved 3% on incomes over $200,000

x$0-infinity 2.75% PLUS 3%

Public testimony from Tuesday, covering changes to the BETR and BETE programs can be found here.

First day of public hearings on the governor’s proposed biennial budget

The Appropriations committee, joined by the Taxation committee, opened public hearings on the governor’s biennial budget Governor LePage began his administration’s presentation with wide ranging testimony that frequently touched on initiatives before the committee in the budget.

Commissioner Rosen, elected officials and members of the public presented testimony. Commissioner Rosen presented the only testimony in support of the governor’s proposals, everyone else opposed the initiatives.

The Commissioner repeatedly referred to standalone legislation details of which are not available. In response to specific questions committee members were asked to view proposals in a complete picture including the proposals about which details are currently unavailable.

Items receiving the most attention were:

  • Restricting the Homestead property tax relief program to homeowner 65 years of age or older
  • Setting the percentage of sales and income tax distributed to municipalities through Revenue Sharing at 2% in perpetuity

Hearings continue Tuesday with further tax portions of the budget including:

  • Changes to BETR/BETE
  • Repeal of the state excise tax on telecommunications property to allow municipalities to levy property taxes on that equipment

January 31, 2017: Maine Public Employees Retirement System

Sandy Matheson, Executive Director of the Maine Public Employees Retirement System (MEPERS) spoke with the Appropriations committee to provide an overview of the retirement system.

The system manages retirement for state employees, teachers, judges, legislators and various local employees through a range of different plans with varying degrees of funding.

Health of plans

Every plan is above 80% funded today compared to 36% funded in 1991:

State/Teacher plan- 80.4% funded
Legislator plan- 148.5%
Judicial plan- 100.9%

The percent of funding represents how much of the total funds needed to fulfill the state’s pension obligations in the long term

The difference between that percentage and the total is known as the unfunded actuarial liability (UAL)

The health and recovery of Maine’s retirement system is remarkable among state retirement systems.

Earnings assumptions

6.875% assumed rate of return on investments, 6th lowest in the nation

In 2009 rate was assumed to be 7.75%

MEPERS internal thinking is that the correct rate may be between 6%-6.5%, there is no current plan to reach this goal

Asked why the rate is assumed to be in the neighborhood of 6% when current returns are near 5.2%, Director Matheson clarified that the higher rate is a long-term earnings assumption shared by many investment advisors

Costs in the new biennium

$120M increase in costs over the upcoming biennium (to $720M) related to market volatility in recent years

Maine uses a ten-year amortization for managing losses and liabilities, this creates huge swings as the plan approaches 100% funding

To manage that volatility MEPERS recommends moving to a 20 year amortization schedule

Cost of living adjustment

The cost of the 2.2% cost of living adjustment (COLA) freeze proposed by the governor is $60-65M over the biennium

Rep. Martin asked what the cost would be to increase the pension base upon which COLAs are determined by $5,000 as well as providing a COLA to employees instead of using those funds for further UAL payments as proposed by the governor

Asked if the extra $60-65M payment on the $2.5B UAL as envision in the governor’s proposal would have a significant impact on the UAL payment schedule, Matheson indicated that it would not, but is uncomfortable with the word “significant”

Part HH of the biennial budget relating to retiree COLAs will be heard on March 8th

Appropriations will hold a work session on LD 302, the supplemental budget at 1:00PM on Wednesday