In a demonstration of the shortest memory in Maine gubernatorial history, Governor Mills, just seventeen hours after signing the second of three spending bills in four months that excluded Republicans, issued a press release claiming that “my Administration has worked in a bipartisan fashion with the Legislature.”
In a press release today, the Governor claims that her “sound fiscal management” is the reason for, among other beneficial economic outcomes, a $223 million deposit into the state’s Budget Stabilization Fund (or “Rainy Day” Fund).
Less than a year ago, the Governor’s plan for the state budget anticipated a $1.4 billion revenue shortfall – a full one-third of the entire year’s revenue. In response, she ordered her departments to freeze spending and find a quarter of a billion dollars in cuts. That was her plan.
In contrast to her dire predictions for the state budget, state revenues were up $225 million (6%) with one month to go in the fiscal year—not down as the Governor had planned. The two largest areas of revenue growth came from individual income and sales taxes.
In a whopper of revisionist history, the Governor now claims that the revenues she failed to predict last year are “a testament to both the foresight and planning of the Governor.”
Anyone who has paid any attention to the state’s economy in the last year is keenly aware that what created a robust budget surplus of more than $1 billion dollars for Maine was not the Governor’s planning for doom and gloom, but a massive influx of cash from the government in Washington.
The money sent directly to state government in the CARES Act and the American Rescue Plan alone exceeded $2 billion.
The jump in state revenue from income and sales taxes was a direct result of these federal programs and others like the Republican authored Paycheck Protection Program (PPP), which sent $3 billion in grants to 39,000 Maine employers. In addition, hundreds of millions more in weekly bonuses of $300 to unemployed workers along with tens of millions more in Economic Injury and Disaster Loans (EIDL), school grants, and many more COVID relief and economic recovery programs all enabled Mainers to earn and spend more money, despite the economic effects of the pandemic.
While the Governor would like to rewrite history to convince Maine people that what we have all seen with our own eyes did not happen as we saw it, the reality of the state budget’s current solvency is not her “responsible fiscal moves,” or her “prudent fiscal management.” It is the result, rather, of the massive influx of cash from Washington, D.C. that put money in people’s pockets and enabled them to pay their bills and spend more.
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