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

AFA Update- Thursday, January 26, 2017: marijuana and the supplemental budget

Following the morning session of the House Appropriations met briefly to exempt LD 88, An Act To Delay the Implementation of Certain Portions of the Marijuana Legalization Act from the Appropriations table, clearing it for final enactment in the Senate and transmission to the governor’s desk.

Reconvening later in the afternoon, AFA took up policy committee report backs on the supplemental budget.

The Education and Cultural Affairs committee (EDU) unanimously supported all but one of the Governor’s proposals. One member voted in opposition to providing additional funding to the University of Maine System (USM).

AFA had a lengthy discussion about the proposal to support diversity of all kind in the Maine legal community through Maine Law.

The Department of Education provided some additional material to the committee.

PLUS 2016 Final Report

PLUS Program Responses

Every other committee report back unanimously supported the proposals in their purview, (except the Labor, Commerce, Research and Community Development committee (LCRED) who has not yet submitted a report). The State and Local Government committee (SLG) also voted on a split vote (7-6) to provide $155,000 in funding to provide for the scheduled June referendum.

AFA Update- Wednesday, January 25, 2016: Riverview, marijuana, General Fund status and supplemental budget language

The Appropriations committee convened this morning to receive information on and make a recommendation to Legislative Council regarding the Administration’s now withdrawn request to build a secure forensic step down facility adjacent to the Riverview Psychiatric Center (RPC).

Letter from Governor explaining his new preference for a Bangor based facility

Response from AG to letter from Sen. Katz and Rep. Frey asking the Attorney General (AG) to weigh in on the Governor’s authority to build a facility without legislative authorization and the authority of the Department of Health and Human Services (DHHS) to establish a new program

The AG finds that the Governor does not have the authority to build any new facility without some approval from the Legislature. She also finds that DHHS is within its legislatively granted authority to establish and operate a program.

Sen. Katz moved that should the Administration seek again to build the step down facility in Augusta, Legislative Council should approve that construction.

House Republicans voiced objections to addressing an issue they feel has been withdrawn and expressing a preference either way.

The committee still has an outstanding charge from Legislative Council to make a recommendation.

Rep. Hubbell suggested an amendment to the motion noting that the committee did not discuss the exact proposal but recognizes the need for a facility..

The committee unanimously approved Sen. Katz motion as amended with Rep. Hubbell’s recommendations.

The committee also received a copy of the fiscal note for LD 88, An Act To Delay the Implementation of Certain Portions of the Marijuana Legalization Act.

Director of the Office of Fiscal and Program Review (OFPR) Chris Nolan joined the committee to review the status of the General Fund.

  • At the end of the last fiscal year (FY16), taking into account the actions of the 127th Legislature the projected balance at the end of this fiscal year (FY17) would be $55.6M
  • After the December 2016 Revenue forecast the projected balance at the end of this fiscal year would be $89.8M
  • The certification of Question 2, Stand up for Students, boosts that balance to $133.6M, before the transfer to the Fund to Advance Public Kindergarten to Grade 12 Education
  • If the FY17 supplemental budget is approved as proposed by the governor the balance drops to $77.9M

The baseline GF balances at the end of this FY and each year of the biennium are

  • FY17 $133.6M
  • FY18 $249.8M
  • FY19 $397M

Enacting both the supplemental budget and the biennial budget as proposed by the governor leaves the following year end balances

  • FY17 $77.9M
  • FY18 $31.7M
  • FY 19 $59.1M

 

Noting that report backs from policy committees are due at 1:00PM on Thursday, AFA began to review the language portions of the supplemental budget.

 

AFA Update- January 5, 2017- Riverview stepdown facility public hearing

Thursday afternoon the Joint Standing committees on Appropriations and Financial Affairs (AFA) and Health and Human Services (HHS) met at the direction of Legislative Council to ask questions about the Administration’s plan to build and privately operate a secure forensic mental health facility.

Initially the Department of Health and Human Services (DHHS) and the Bureau of General Services (BGS) planned to construct a facility on the Riverview Psychiatric Center (RPC) campus in Augusta. This location requires the approval of Legislative Council.

The Department and the Administration have chosen to not provide sufficient answers to specific questions surrounding the construction and operation of the proposed facility.

The Department and the Administration did not choose to attend today’s hearing.

Immediately prior to today’s meeting BGS submitted a letter to Legislative Council withdrawing their request for the Council to approve a project in Augusta, confirming the Governor’s statements of his intention to build the privately operated facility in Bangor.

Dan Wathen, Court Master for the AMHI Consent Decree and former Chief Justice of the Maine Supreme Court joined the committees.

Take-aways from Judge Wathen’s testimony

  • RPC has improved
  • 9 nursing vacancies of the 15 total vacancies
  • Incidents of seclusion, restraint are reduced
  • Sense that staff morale is better than previously
  • Supports a new unit for increased forensic capacity
  • 28 forensic clients now at Dorothea Dix in (DDPC) Bangor
  • Recommends approval of facility by the committees and by Legislative Council
  • Has seen draft operation RFP, has made recommendations about ensuring staffing meets the terms of the Consent Decree, Wathen is comfortable using the existing process to address his concerns should the Department not act on them
  • Transfer from RPC to the proposed facility will require the approval of the court in Wathen’s opinion, the Department may disagree but is not available to share their thoughts
  • Understands that this would be a locked facility, equal security to RPC with more treatment and freedom within the facility
  • Wathen’s assumption is that only those found not criminally responsible (NCR)but stable yet still not ready for release would be served in the proposed facility
  • 21 beds is likely the appropriate number
  • Per patient costs at RPC are $1,300/day or $475,500/year, at $3.6M per year for 21 beds the projected annual costs per patient are $171,429, or $470/day.
  • In October DHHS disclosed to Wathen that most of the construction funds come from substance abuse and mental health services accounts
    • DHHS told Legislative Council that these vague sources are intended to be used
      • Construction $3.5
        • Mental Health GF $650K
        • Unspecified “unobligated unspent funds”- $900K
        • Unspecified “unspent” funds- $500K
        • Federal case management gr ant- $1.5M
      • Operation- $2.6M
        • Mental health GF- $1M
        • Consent Decree- $550K
        • A piece of current $1.4M appropriation for “forensic patients”
      • Augusta may be preferable due to continuity of treatment
      • The judge is not weighing in on the likelihood of this facility restoring CMS certification and federal funding to RPC
      • When asked, the judge said he could think of no advantages to build the facility in Bangor

Members of the public then testified including current, forensic patients at RPC, family, staff from the facility, representatives of Disability Rights Maine, and the Maine branch of the National Alliance on Mental Illness.

Several people raised the possibility of using these funds for community based services to help people before they enter RPC.

Questions from Donald Beauchene, a forensic client in a letter filled with questions from other patients cover such basic issues as will TV’s be allowed in rooms, will laundry facilities be available on site, how will meals be provided, what sort of onsite supports will be available  and what will the staffing ratios be?

Simone Maline Executive Director of the Consumer Council System of Maine let the members know that these facilities are patient’s homes. Stakeholders have not been consulted in the view of the councils.

The Maine Hospital Association (MHA) reiterated support for construction of the facility. They feel the proposed facility to provide more capacity at RPC, capacity that will alleviate the number of civil patients waiting in emergency rooms for a bed at RPC. MHA stresses that they do not have answers to questions posed by the legislature, advocates or consumers. Despite this lack of information from the department, MHA supports the construction of the facility.

The ACLU of Maine (ACLU) provided testimony expressing concern over the due process rights of patients, the proposal to privatize the operation of the facility.

Further, the ACLU provided a memo arguing that the Governor does not have the authority to build a new facility anywhere or create a new program without the assent and backing of the Legislature.(Updated document)

Sharing the testimony of a worker who needed to leave, Sarah Bigney of the Maine AFL-CIO spoke of concerns about the privatization of a facility, highlighting increased violence at private prison/forensic provider Correct Care’s facilities. Some states have reversed course on privatization of these kinds of facilities. Marianne Turowski of the Maine State Employees Union (MSEA)Turowski also noted that in her years here policy surrounding mental health treatment it has always been a full, public discussion.

She also cannot recall a Governor building any facility without the participation of the legislature.

Citing continuity of care and seamless transitions it was also questioned how privatization meets those concerns.

After a brief break, the committees reconvened giving them until Noon Friday to submit questions to the Office of Fiscal and Program Review (OFPR) for submission to the Administration.

Wednesday, January 18 was set as the deadline for each committee to make their recommendation to Legislative Council. It was also agreed that it be requested that DHHS respond to any and all questions by Friday, January 13.

It was also asked that the Attorney General provide their opinion on the Governor’s authority to construct a new facility without the participation and funding of the legislature