(The Center Square) — Maine Gov. Janet Mills is urging lawmakers to address a widening funding gap in the state’s Medicaid program that could result in deep cuts in funding to health care providers this year.
In a memo to legislative leaders, Commissioner of the Department of Administrative and Financial Services Kirsten Figueroa said lawmakers need to take immediate steps to address a projected deficit of $450 million in the next two-year general fund budget and offset a $118 million shortfall in the current year’s budget for MaineCare, the state’s Medicaid program.
“If this supplemental is not enacted in a timely manner, the Department of Health and Human Services will likely have to take the extraordinary step of limiting payments to health care providers as early as the spring of 2025,” she wrote.
Figueroa attributed the gap to several factors, including an increase in MaineCare enrollment during the COVID-19 pandemic and changes in federal policy that expanded eligibility. Other factors include the lingering pinch of inflation and workforce shortages that have driven up costs for health care providers, she said.
“Multiple states, including several across New England, are experiencing similar difficult budget environments after years of rapid revenue growth following the pandemic,” she wrote. “Additionally, longstanding Federal funding for some programs has been reduced, such as Federal disaster aid or FMAP with the State of Maine having to consider assuming some funding obligations.”
Maine’s Constitution requires a balanced budget, and recent projections show that Mills and legislative leaders already need to make nearly $1 billion in adjustments by cutting costs or raising new revenues to fully fund the spending package.
Mills said her fiscal year 2025 budget proposal will focus on maintaining “core commitments” to Mainers, including expanding voter-approved health care, 55% of education funding, free community college and 5% of revenue sharing for municipalities, Figueroa said. Any other investments will be “limited and will focus on supporting the health and safety of Maine people and the operations of the State of Maine,” she wrote.
“While, on balance, the State of Maine has enjoyed significant new revenues over the past several years that have allowed for investments in important new programs that have benefited Maine people, difficult decisions should be expected and difficult changes must be adopted this year to balance the budget and ensure the fiscal stability of the State budget moving forward,” Figueroa wrote.
Republicans say the latest budget shortfall projections show that the state doesn’t have a revenue shortfall but a spending problem. They criticized Democrats and the Mills administration for a lack of fiscal restraint in creating new programs and expanding services.
“Republicans stand firm in our efforts to combat reckless spending initiatives that continue to exacerbate our fiscal condition,” Maine House Republicans said in a statement. “Maine already has one of the highest tax burdens in the country. As we confront today’s budget shortfall, Republicans will prioritize true ‘needs’ over ‘wants’ and oppose any efforts to raise taxes on Mainers.”