For the first time since lawmakers adjourned March 17, the Legislature’s budget-writing panel returned to the Statehouse May 29 to hear from Mills administration officials on the state’s financial outlook and what current and anticipated federal assistance could do to head off a major financial crisis.
The partly virtual session of the Appropriations Committee took place against the backdrop of a deepening behind-the-scenes conflict between Democratic Gov. Janet Mills and her party’s legislative leaders over how large a role lawmakers should play in reopening the state economy and, ultimately, when the Legislature will reconvene.
Mills was granted sweeping emergency powers by a near-unanimous vote in March, but cracks in the consensus have been growing, with minority Republicans advocating a quick return to Augusta. Democratic leaders have been more measured, but they, too, are becoming impatient.
On Friday morning, just before the Appropriations Committee meeting, Senate President Troy Jackson and House Speaker Sara Gideon called again for an immediate, formal liaison between the executive and legislative branches. Mills rebuffed the first such request three weeks ago, saying legislative suggestions were being considered along with those of “thousands” of other Mainers.
Asked for a response, Mills’ office released to the Phoenix a private letter addressed to Jackson and Gideon a week earlier, followed by a press statement a half-hour later. The bulk of the letter repeated the reasons why Mills believes any further legislative participation is currently unnecessary.
“I am not convinced that a formal commission, which you have requested be staffed, advised and informed by our already busy executive branch department heads and employees, would add anything to the robust flow of information and advice currently in place,” she wrote on May 22.
Saying administration decisions are being made “on the basis of fact, science, and medical expertise,” she cited “the success of our efforts” in containing COVID-19 “compared to other states.” A commission, Mills wrote, “would only divert from the critical and time-sensitive work we are doing and inject an unnecessary layer of political partisanship into these very sensitive decisions.”
The governor did offer an olive branch, however, concerning spending the $1.25 billion sent by Congress to state governments under the Coronavirus Aid, Relief and Economic Security Act – along with an estimated $4 billion provided to Maine businesses through the same measure. She invited “advice and counsel” from legislators at the Appropriations session, and they immediately accepted the offer.
During discussion of Mills’ emergency order, legislators pointed out that the reversal on June 1 restaurant reopenings in Cumberland, York, and Androscoggin counties had left owners holding the bag.
They said restaurants purchased perishable food and supplies in anticipation of reopening their dining rooms but now would have few patrons. Finance Commissioner Kirsten Figueroa asked whether food banks could be organized to distribute some of the food, and seemed sympathetic to reimbursement through CARES, telling lawmakers, “I’ve just sent the text.”
The administration’s solicitousness contrasts with neighboring New Hampshire, where Republican Gov. Chris Sununu has already designated some $400 million of the state’s $1.25 billion share for business assistance – in addition to funds already allocated – while ignoring the Democratic-controlled Legislature. Sununu may hit a roadblock, however, because Democrats also control the state’s Executive Council, which must approve state contracts.
Figueroa suggested that top priorities for Maine’s CARES spending might be “backfilling” the Unemployment Insurance fund, expected to disburse more than $270 million, in addition to direct federal grants boosting weekly compensation to $600 a week through July 31. Otherwise, the money would have to be recovered through increased payroll taxes, stressing already hard-hit businesses.
The other “big-ticket” item she cited was additional expenses schools will face when reopening, for protective equipment and the additional bus runs needed to provide required distancing. She said this could average $1 million for each of Maine’s 211 school districts – more than $200 million.
To date, it doesn’t appear that falling state revenues qualify as “coronavirus related” expenses eligible for CARES funding, though some lawmakers begged to differ. Appropriations members promised their own wish lists, to be delivered at the next committee session.
Whether state budgets can be rescued through congressional action may well depend on the so-called fourth recovery measure, one that’s divided Republicans and Democrats in Washington, D.C., and, to some extent, the U.S. House and Senate as well.
Responding to the impasse, House Speaker Nancy Pelosi pushed through the HEROES Act – the latest lengthy acronym, for Health and Economic Recovery Omnibus Emergency Solutions. It clocks in at more than 1,800 pages and would spend $3 trillion, on top of the $2.2 allocated through CARES. A greater share would go to state and local governments; in Maine’s case, more than $3 billion. It would also provide generous local funding; Portland would receive $130 million over two years.
The HEROES Act is given no chance of passage in the GOP-controlled Senate, yet Majority Leader Mitch McConnell backed off earlier opposition last week, saying he expects one more relief bill to be enacted in “about a month.”
Appropriations members focused on other topics, including fraudulent attempts to gain unemployment benefits – part of a nationwide hacking effort using illegally obtained personal information. Commissioner Figueroa disclosed that she, too, was among those whose names were used.
While the discussion was businesslike, and at times friendly, there was an undercurrent suggesting lawmakers’ concerns about consultation.
Veteran Rep. Sawin Millett, R-Waterford, who served as finance commissioner for Govs. John McKernan and Paul LePage, said he had no problem with current administration actions. But he said any new initiatives, such as those being discussed, “should not be done without legislative concurrence” – meaning lawmakers must reconvene.
House Chair Drew Gattine, D-Westbrook, put it more delicately, saying “the fact we haven’t figured out how we’re going to interact together, how we’re going to work with the administration” was something “that needs to be resolved quickly.”
Ultimately, the Legislature could call itself back, but Democratic leaders aren’t yet ready to act without the governor. Neither Gideon nor Jackson responded to further inquiries about the standoff, and in a message to constituents, Gideon called prospects for a special session “uncertain.”
Douglas Rooks has covered Maine issues for 35 years as a reporter, editorial writer, columnist, and former editor of Maine Times.
Pandemic precautions change Statehouse procedure
The May 29 gathering of the Appropriations Committee was like nothing seen before this spring.
In accordance with legislative rules, there had to be a quorum – seven of the 13 members – in the room to begin the meeting. Five stayed for the early stages, with appropriate physical distancing.
Senate Chair Cathy Breen, D-Falmouth, took her position at the head of the traditional “horseshoe” table, while House Chair Drew Gattine, D-Westbrook, moved around the semi-circle about 6 feet away.
No reporters were allowed, but one photographer and one videographer were on hand to record the proceedings. There was no live stream, only audio.
At the base of the horseshoe was a large video screen, occupied mostly by Finance Commissioner Kirsten Figueroa, with occasional appearances by Associate Commissioner Michael Allen. Breen and Gattine took turns running the meeting and calling on questioners.
Although the give-and-take wasn’t smooth, and scarcely resembled the intense dialogue that often takes place when the entire committee, and its witnesses, are in the room, most lawmakers – some at home – did get to ask questions, which were promptly answered.
Three more weeks of hearings by committees – another with Appropriations, and others by the Education Committee and Agriculture, Conservation and Forestry Committee – are scheduled, using essentially the same format.
And from that evidence, it appears the reconvening of the Legislature itself – and the opening of the Statehouse complex for its other functions – may still be weeks or even months away.
— Douglas Rooks
What do the numbers mean?
How big a state budget shortfall does Maine face in the coming year? The headlined number in most newspapers after a May 29 Appropriations Committee hearing was $525 million, based on estimates from Finance Commissioner Kirsten Figueroa.
But some projections are much larger – Moody’s Analytics predicted a $1.2 billion shortfall, using a forecast of up to 30 percent declines in state revenues across the country.
Figueroa quickly deflated that figure, saying, “That’s not based on any state-specific numbers.”
Maine is in better shape than many states, she said. It has the 11th best-funded public pension system, and has no bond anticipation or revenue anticipation notes outstanding, nor is it likely to need them.
Yet even the state’s numbers are, to some extent, “guesstimates.”
In another exercise, designed to show Maine needs considerably more federal help than the $1.25 billion already allocated under the CARES Act, Figueroa pegged the likely next-year gap at $725 million.
The problem, as Associate Commissioner Michael Allen put it, is data, or lack of it.
“We just don’t have the numbers yet,” he said. “We have April, and that’s likely the worst month, but we just don’t know what lies ahead.”
In terms of budgeting, the coronavirus pandemic began at a convenient – though hardly the “right” – time.
In 2018, the Department of Finance and Administration mocked up a “stress test” modeling a potential recession, predicting a 4 percent decline in current year revenues, and 7 percent the following fiscal year – which, in real life, starts this July.
That would produce a $200 million current shortfall.
“It was based on the Great Recession of 2007-09,” Allen said. “That was the most severe event we’d had since the Great Depression” of the 1930s. Since the fiscal year ends June 30, with just three months of virus effects, the state will likely finish in the black.
In fact, the shortfall is more likely around $150 million-160 million, Allen said. Although sales tax revenues have indeed plunged, income tax withholding is surprisingly stable.
“We think that’s because of all the unemployment checks that are going out, which are taxable,” he said.
And because the Legislature hastily left town in March with unallocated revenues of $193 million, the state probably won’t have to touch its reasonably healthy “rainy day” or Stabilization Fund, which stands at $258 million – at least not until next year.
For now, that’s about as certain as it gets in these uncertain times.
— Douglas Rooks
