(The Center Square) — Maine Gov. Janet Mills is proposing to hike taxes on cigarettes and pot while scaling back several public health programs to help whittle down a projected $450 million budget shortfall next year.
In her $11.6 billion two-year preliminary budget plan, unveiled on Friday, Mills is calling for higher taxes on tobacco products, cannabis and streaming services as the state seeks to reduce the budget deficit. The Mills administration also faces a projected $118 million revenue shortfall in MaineCare, the state’s Medicaid program.
“This was a difficult budget to put together,” Mills, a Democrat, said in a statement. “Our economy is strong, but our revenues are leveling-off, and while prior legislatures have made many important and worthwhile investments, we have to consider what we can sustain in this budget cycle.”
Mills said the focus of the spending plan is on maintaining “core commitments” in the budget, including expanding voter-approved health care, 55% of education funding, free community college and 5% of revenue sharing for municipalities.
Her plan calls for increasing the state’s excise tax on cigarettes by $1 to $3 per pack. The Mills administration is also proposing to increase the tax on recreational cannabis from 10% to 14%. The governor also revived a proposal to set a state tax on video streaming services.
Senate President Mattie Daughtry, D-Brunswick, praised the governor’s proposal, saying it recommits “to the historic progress we’ve made in recent years to support working Mainers and their families” and that the budget committee, along with other legislators and the public, will be working to find solutions to address the state’s most pressing needs in the coming weeks.
“I look forward to seeing the public weigh in so we can reach a bipartisan, responsible agreement that every Mainer can be proud of,” Daughtry said in a statement.
Last week, the state Department of Administrative and Financial Services warned legislative leaders that the state is facing a projected deficit of $450 million in the next two-year general fund budget and a $118 million shortfall in the current year’s budget for MaineCare.
The Mills administration 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.
Republicans argue that the state doesn’t have a revenue shortfall but a spending problem, and they’ve criticized Democrats and the Mills administration for a lack of fiscal restraint in creating new programs and expanding services.
House Republican Leader William Faulkingham, R-Winter Harbor, said he opposes the Mills administration’s proposal to increase taxes and wants to see cuts in spending and eliminating unfilled state jobs as part of the budget.
“We are already one of the highest taxed states in the country so we don’t really see a need to increase any taxes,” Faulkingham posted on social media. “We need to cut the size of government.”