Sticker shock: Debating the costs of LePage’s State of the State proposals

Bangor Daily News/Gabor Degre

Bangor Daily News/Gabor Degre

“How good are you at math?”

That’s what I asked Bill Brown, special assistant for budget and policy for Democratic House Speaker Mark Eves, minutes after Gov. Paul LePage’s State of the State address Tuesday night. Bill said something to the effect of “Pretty good, why?”

“How much would the initiatives proposed by the governor tonight cost the state?” I said, before ending the conversation abruptly by trotting off to talk to some lawmakers. Well, Bill came back today with an answer: Nearly $3 billion. Here’s his breakdown:

Compiled by Bill Brown, special assistant for budget and policy for House Speaker Mark Eves, D-North Berwick

Compiled by Bill Brown, special assistant for budget and policy for House Speaker Mark Eves, D-North Berwick

There’s a lot here that LePage disagrees with, most notably the net financial effect of Medicaid expansion, which will cost or save the state hundreds of millions of dollars, depending on who’s talking and which study they’re talking about. Let’s skip that one and break down the context behind the other numbers.

Moving people off wait lists for social services before or instead of expanding Medicaid is a familiar argument made by expansion opponents in the State House and beyond. Republican Rep. Deborah Sanderson of Chelsea tried to amend a Medicaid expansion bill last year to include funding for eliminating the wait lists. Her amendments, which Democrats said amounted to an attempt to kill the Medicaid expansion bill by ballooning the cost, failed after the price tag was estimated at $75 million. For a more complete understanding of the wait list issue and how the Legislature stripped $7.5 million out of LePage’s budget bill that would have slightly reduced the wait lists, check out this careful analysis from last June by my BDN colleague Matthew Stone.

The education priorities identified by Brown are initiatives that LePage originally proposed in his biennial budget bill last year to be funded out of general purpose aid for schools, the pool of state money that traditionally has been earmarked to go directly to public schools. Those initiatives included $1.5 million to support career and technical education centers; $1 million to fund the second year of LePage’s “bridge program,” which enables students to earn college credits while in high school; and $450,000 to support the Jobs for Maine Graduates Program next year. Those provisions were stripped out of the budget by the Legislature but LePage is passionate enough about them that he included them in a list of $119 million in budget shortfalls his administration gave to the Legislature last month.

LePage devoted part of his State of the State Address to championing the importance of maintaining roads and bridges through $2 billion in Department of Transportation projects over the next three years. That spending is part of the DOT’s ongoing work plan, which is largely federally funded, and would probably include a huge price tag no matter who is governor. However, LePage did an about-face on state borrowing last year when he spearheaded an effort to present a $100 million bond for transportation projects to voters. That bond was approved by more than 72 percent of voters last November.

The $200 million “loss of Statoil investment” included in Brown’s list refers to a Norwegian energy conglomerate’s announcement last October that it was pulling the plug on an offshore wind pilot project that it had planned to spend between $120 million and $200 million on. The company cited maneuvers by the LePage administration near the end of last year’s Legislative session around an omnibus energy bill that sought to re-open a request for proposals process for an offshore wind pilot project. As a result of LePage’s amendment, a consortium called Maine Aqua Ventus, which includes the University of Maine, Cianbro, Emera and Maine Prime Technologies LLC, is moving forward with an offshore wind pilot project.

The $110,000 statewide referendum cost cited by Brown involves LePage’s proposal Tuesday night to ask voters whether they want a $100 million tax cut, which Democrats argued after the speech has been attempted by various methods in the past decade in three separate referendums that failed to pass.

LePage ended his speech Tuesday night by announcing an initiative to fight drug abuse in Maine by “fully funding” the Maine Drug Enforcement Agency and creating 4 new drug prosecutors in the attorney general’s office, 4 new drug court judges and 14 new agents in the Maine Drug Enforcement Agency.

Adrienne Bennett, a spokeswoman for LePage, said Brown actually underestimated the cost of the drug prevention initiative and that its cost is estimated by the administration to be about $2.7 million a year. Bennett said the administration would come forward in coming weeks with bills to accomplish this and some of the other initiatives.

Typically, a sitting governor would include some of these proposals in a supplemental budget bill, but LePage has told the Legislature that he will not submit one this year even though there is a revenue shortfall of nearly $100 million in the current fiscal year and the next.

“We have limited resources as a government and we need to come together to compromise on initiatives that are priorities,” said Bennett. “What the governor outlined last night in the State of the State are issues that Maine people care about.”

Brown did not include in his analysis the cost of a broad economic development proposal unveiled by LePage called “Open for Business Zones.” For companies that invest at least $50 million and create 1,500 jobs, LePage proposes offering discounted electricity rates, employment tax benefits, job training, increased access to capital and a guarantee that workers won’t be required to pay any labor union dues.

Perhaps the reason Brown didn’t try to estimate the cost of this initiative is that there are so many variables ranging from the size of a company’s workforce to its electricity usage. Bennett didn’t have an estimate of the cost either but said it’s an investment that Maine needs to make in order to compete with other states that offer considerable financial incentives to attract big businesses. It’s an interesting stance from a governor who says he believes in small government, has staunchly opposed subsidies for renewable energy projects and insists that private enterprise can solve a lot of problems on its own.

“The basis of this was the many times Maine has been passed over due to the lack of incentives our state has to offer,” said Bennett. “What our economic policy team did was look at the packages that some companies were seeking and we put together a proposal that was appealing for those sorts of companies.”

On these initiatives alone, lawmakers will have plenty to debate between now and April, when the Legislature is scheduled to adjourn. Overshadowing those debates is the fact that even without new spending, state government faces a significant shortfall, the solution to which will be politically difficult for Republicans and Democrats to address. If the Legislature can’t enact a budget bill – or if LePage vetoes it – it sets up either a curtailment order by LePage that would de-appropriate money across state government, or the possibility that LePage will call lawmakers back for special sessions during the summer to address the budget problem.

Christopher Cousins

About Christopher Cousins

Christopher Cousins has worked as a journalist in Maine for more than 15 years and covered state government for numerous media organizations before joining the Bangor Daily News in 2009.