Highlights of Maine’s Proposed Budget

"This is a balanced budget that makes critical investments," said Governor Baldacci, announcing his budget.

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Highlights of Maine’s Proposed Budget

by Ramona du Houx

Governor Baldacci did what he always has done when he campaigns — he listened carefully to the people of Maine. They were upset, about their houses being assessed at rates that made it nearly impossible to pay their property taxes. They were upset about their local superintendent’s office adding to their property tax bills by increasing expenditures for their administration, instead of enhancing their children’s educational opportunities.

During the past four years the governor set the stage for dramatic change in Maine’s educational system and tax structure. Working with the Legislature, he enacted LD 1, which increased the circuit breaker, giving 200,000 Mainers the ability to receive rebates on their property taxes. LD 1 also placed caps on spending for school administrations, municipalities, and state government. He put the Essential Programs and Services (EPS) school funding formula into action, which is working to make state school funding equitable across Maine, focused on essential needs and increased state funding to education, from 43 percent to 50 percent.

Now he has proposed a $6.4 billion biennial budget package that takes bold measures to reduce government without broad-based tax or fee increases, and reduces property tax while it consolidates Maine’s school districts’ burgeoning bureaucratic administrations.

"This is a balanced budget, that makes critical investments," said Baldacci. "It protects Maine’s most vulnerable citizens, while streamlining the administrative bureaucracy in the public school system, and providing tax relief for Mainers.

"Importantly, the budget presented here reflects my continued commitment to property tax relief through an increase in the state’s share of education funding to a full 55 percent by state fiscal year 2009. This initiative will result in a $170 million reduction in the funding burden at the local level, providing immediate, mandatory property tax relief for Maine families and businesses."

With the increase of state education funding, he will demand that local municipalities guarantee a reduction in property taxes. He has vowed to veto any proposal that does not ensure this guarantee.

Baldacci is firm about using the power of his veto because school administrations across the state have exceeded the LD 1 spending cap. If they had stayed within the cap, Mainers should have received a substantial property tax cut. Part of the governor’s plan to reduce property taxes has always been linked to education spending, because usually the largest expenditure towns have is in education costs. The logic is simple: have the state increase its spending on education, then local property taxes should diminish. The LD 1 cap should have encouraged school administrations to stay within spending limits. But they decided to break faith with the people they serve and continue spending beyond their means despite 800 million state dollars being channeled, by fiscal year ’09, into education from this administration.

The second annual progress report on LD 1 showed that the growth rate of property taxes was lower than before the law went into effect. According to the State Planning Office (SPO) report, about 70 percent of increased state funding is being used to offset local property tax revenues.

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Henry Renski, an economist who holds a Masters in Regional Planning, helped compile the LD 1 progress report. Renski said that school administrations continue to spend more than the limits prescribed by LD 1, while the State and municipalities stay within the limits — saving taxpayers money.

"This year, evidence of LD 1’s impact is mixed. The state and a majority of county and municipal governments stayed within their capped limits. They kept their word with the people to abide by these benchmarks. In 2006 we saw a tax savings of $94 million for resident homeowners and $23 million for businesses," said Martha Freeman, director of SPO. "But eighty-one percent of school administrative units exceeded their LD 1 limits, and growth of total school appropriations increased for the third year in a row."

"Eighty-one percent of school administrative units exceeded the spending benchmarks. That’s right over eight out of ten. This is unacceptable. We must have accountability at all levels of government, and school administrative districts, like everybody else, must learn to live within their means," said Baldacci strongly. "Maine people have not gotten the relief they deserve. It’s unacceptable, and changes need to be made. That’s why I have proposed reform of school administration, improving education of our children and giving relief to Maine resident property tax owners.

"I will veto any bill which does not contain mandatory provisions to pass savings on directly to the people. Maine people deserve better. They will get it."

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Baldacci’s chief-of-staff, Jane Lincoln, talks budget issues with Ryan Low, deputy chief-of-staff.

The Local Schools Regional Support Initiative (LSRSI) — school administration reform

The governor’s Local Schools Regional Support Initiative (LSRSI) has proven to be the most controversial part of his budget proposal. While it is heartening to witness how deeply Mainers feel about education as they attend public forums, it’s disturbing to see that some have made assumptions that aren’t based on the facts about LSRSI.

Communities will have more opportunities to participate in their schools by diminishing the top-down approach that has happened with an overabundance of superintendents and their administrations. In essence the governor’s proposal gives schools back to their local communities, while increasing state education funding and lowering property taxes — exactly what people across the state have been asking for.

"What the governor is proposing is downsizing the 290 school administrative units to 26 regionalized administrative districts. Each would get a superintendent, administrative staff; and a new elected regionalized school board — representing communities that are within that region. Each school would then transition from the current school boards to a local council of parents and community members that would advise each school and would be accompanied by a full-time principal. All this would put more focus on the classroom, giving more opportunities for communities to participate in their schools," said Commissioner Becky Wyke of the Department of Administrative and Financial Services. "People should give the proposal a chance."

The state’s existing vocational technical schools are being used as a model for school district consolidation. The 27 technical schools are a working example of how the plan can take effect. With a working model it should be easier to implement the plan.

Delaware last consolidated its schools in the late 1960's from about 400 to 19 school districts.

The new regional districts would share administration of special education, transportation, human resources, payroll and purchasing. Often local school board meetings are weighed down with these issues. In many communities people have stopped attending school board meetings because administrative issues take up all the time. With LSRSI, local parent-teacher groups will have the freedom to discuss local educational issues that need attention.

Empowering communities —

These local school parent-teacher groups will have a principal running them. With LSRSI parents will have a chance to be listened to and teachers will have a place to have there ideas heard. The people that work with students on a daily basis will be the ones making local decisions on how to educate their children, thereby empowering communities.

"It is about local empowerment," said the commissioner of education, Susan Gendron. "It’s about the involvement of local citizens in their schools. The model we’re using is actually one I implemented when I was a superintendent. We had a local advisory board and met with the principals. At the primary school we’d have close to fifteen citizens who would attend. We want to create that structure, so there are more opportunities for local involvement."

Every vote counts —

LSRSI intends to give back local control to the people. In many districts around the state, citizens do not have an opportunity to vote on the school budget. With the governor’s plan, everyone who wants to vote on the regional school district budget can do so. Once approved by the regional school board, three days later the budget would go out to the voters in that region. The people in the region will be the ones voting on how much money is spent for a student’s education. A democratic vote gives people more control over where their money is being spent, for every vote counts.

"We are giving the ability to vote on the budget back to the people," said Martha Freeman.

"It strengthens that local voice in budgeting and the budget reflects the policies of the region," said Gendron.

The Local Schools Regional Support Initiative could save $241 million over three years.

"We will reinvest some of the savings realized by this restructuring, extending the student laptop program through high school. We will also launch a tuition assistance program that will cover 50 percent of tuition costs at community college rates for financially eligible high school seniors," announced the governor. "In addition, the savings in administrative costs would increase professional development for teachers, invest $3.6 million in teacher salaries over the next two years, and place a full-time principal in every school."

Currently Maine has 152 superintendents but no full-time principal in 151 schools.

With this consolidation plan, no school would be closed and hundreds of millions of dollars in tax relief would result.

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Education Commissioner Susan Gendron, DAFS Commissioner Rebecca Wyke and Martha Freeman, director of the SPO, take a break after discussing LD 1’s benefits of reducing property taxes while increasing education funding.

After talking with two principals who had also been superintendents while being active principals, it became clear that in certain areas of Maine, superintendents can easily take on more school districts. "I simply had a lot of time left over, so I recommended to the board that I become a principal as well," said one principal who didn’t want his name printed. "It was such a waste of the people’s money. Consolidation is long overdue. I’d like to see the money going back into the classroom. Our kids should come first. The majority of us are here for them."

"Maine has one administrator for every 393 students," said Gendron. "We are talking about shifting resources from central office administration to the classroom to achieve excellence in education for every student in every classroom in every local school."

Some people across the state are tired of attending local school board meetings where the superintendent has too much control. "It seems that if it’s something the superintendent wants, then it happens. If it’s not the superintendent’s idea, then it doesn’t," said Mary J. Michaud of the SAD 59. "If the superintendent was in charge of multiple districts, more would get done locally."

In a poll commissioned by GrowSmart, conducted from Jan 22–27, support for the LSRS Initiative was significant. Out of 500 registered voters, 70 percent agreed that "local control is costing us too much money in added administration." Only 5 percent disagreed, with the rest undecided.

That added administration manifests with too many superintendents and their staff. Only 15 percent did not support a reduction of superintendents in order to provide property tax.

"We are proud of the work that our administrators are doing, but it is time for a change in the way our administrative units operate. Bold action is required to ensure that resources are being spent in the right place: to support students and teachers in the classroom," said Governor Baldacci.

"Maine people are clearly in support of action that will move us forward. The status quo is not an option," said Alan Caron, president of GrowSmart Maine, unveiling the results of the poll.

Individual concerns need to be heard. Accordingly, the governor has already held community forums across the state. A full day hearing will take place on February 5 at the Augusta Civic Center, of the governor’s plan and others put forward by legislators and organizations.

Maine has a history of embracing good ideas after spirited debate. A few years ago, the state was the worst in the nation for teenage smoking. Now Maine is one of the best states for preventing teenage smoking. When the people of Maine take a challenge on board, positive change can and does happen. Many school districts in other states are larger than those proposed with LSRSI’s 26 districts; these would range from 1,800 to 20,000 students each.

Maine’s time to consolidate school administrative districts is now. Complaints are easily generated from new ideas. Reducing bureaucracy is something most people want to see happen. Change is hard for some to accept. The Legislature and Governor’s Office need your support; please contact them.

Making higher education more accessible —

The education portion of the budget also includes a slight increase in classroom size to a manageable 17 students in middle and high schools, boosts state funding for higher education by more than $42 million, and provides tuition reimbursements of $2,000 for thousands of qualifying students in the University of Maine System, the Maine Community College System, and Maine Maritime Academy.

Annual tuition and fees average $2,800 per student in the Maine Community College System and $6,429 for in-state students enrolled in the University of Maine System. With Federal cutbacks in Pell grants, college costs have dramatically increased. About 15,000 Maine students would receive the tuition scholarships at an annual cost to the state of $5.5 million. The governor is focused on making higher education more affordable.

"The governor has stepped up making college more affordable and therefore more accessible," praised House Speaker Glen Cummings.

The increase in the cigarette tax—

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Maine’s attorney general, Steven Rowe, spoke of how important it is to continue efforts to prevent teens from smoking. In these formative years, the body absorbs the chemicals more, putting teens at a higher risk of becoming addicted and dying because of cigarettes. Increasing the cigarette tax has been shown to prevent teens from smoking.

The cost of a pack of cigarettes could increase by a dollar, producing $66 million a year and bringing the tax to $3 — the nation’s highest.

The cigarette tax also addresses a serious public health problem that costs Maine people $554 million each year in direct health-care costs. "We want to send a clear message about how bad smoking is," said Baldacci. "It’s about more than dollars and cents. It’s about saving lives. Over 29,000 children alive today will die prematurely from smoking." A pack of cigarettes costs Maine taxpayers $11.61 in Medicaid claims.

Governor John E. Baldacci recently received a straight-A report card, on behalf of the State of Maine, for tobacco control from the American Lung Association for the second consecutive year.

The American Lung Association State of Tobacco Control 2006 Report graded all 50 states in four categories: smoke-free air, tobacco taxes, prevention funding, and restrictions on youth access to tobacco products.

"Maine is succeeding because it has taken a comprehensive approach to fighting the tobacco problem. Maine is one of the few state that have implemented all three of the most effective policies to reduce smoking — effective, fully funded programs to prevent kids from smoking and help smokers quit, a comprehensive smoke-free workplace law that protects everyone’s right to breathe clean air, and a high cigarette tax," said Kevin O’Flaherty, northeast regional director, Campaign for Tobacco-Free Kids. "There is no better example of Maine’s persistence than Governor Baldacci’s new initiative to increase the cigarette tax by $1 per pack. Increasing tobacco taxes is one of the surest ways to discourage kids from smoking and encourage smokers to quit, especially when combined with the other tobacco prevention measures Maine has taken."

"The proposal to raise the cigarette tax will keep an estimated 10,000 young people from becoming smokers, saving a third of them from dying prematurely from lung cancer or another tobacco-related disease," said the governor. "It will also save about $238 million dollars in health costs."

One of his top priorities as governor was to make Maine become the healthiest state in the nation.

"Tobacco use still costs too many lives and too much money," said Governor Baldacci. "Every year 2,400 Maine people die prematurely from tobacco-related disease, and every year over $600 million dollars is spent on health costs related to tobacco use. We need to do everything we can to keep our kids from getting hooked on these deadly products."

"The American Lung Association is so proud of what Maine is accomplishing and the leadership Maine is demonstrating. It’s critical, not only for Maine but for the nation as a whole, that your state continue to set an example in fighting tobacco use and the other states follow your example," said Lee Ann Baggott.

Tobacco companies spend more than $74 million on marketing in Maine. They lobby. First and foremost, legislators should be thinking about the health and wellbeing of Maine citizens when they are deciding about the increase in the cigarette tax. Please contact them and voice your support.

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"The proposal to raise the cigarette tax will keep an estimated 10,000 young people from becoming smokers, saving a third of them from dying prematurely from lung cancer or another tobacco-related disease," said the governor, as he accepted an all-A report card for ME from the American Lung Association for preventing smoking.

Managing MaineCare costs

 "If we are to realize sustainable prosperity, we have to be successful at appropriately managing the costs of the MaineCare program. This does not mean sacrificing our compassion for the most vulnerable and needy among us; this document does not reflect any reductions in eligibility or in scope of services," said Baldacci.

"This budget will expand medical management to all adults receiving MaineCare with the exception of those dually eligible for MaineCare and Medicare, behavioral health care, and pharmacy services, helping ensure the provision of the right care at the right time in the right place. It also envisions the implementation of managed care for behavioral health care consistent with those paid across New England."

Within the Department of Health and Human Services, it would save an estimated $11.5 million through managed care for behavioral health services, $20 million through adjustments in payment rates for services, and $42 million by expanding clinical management of MaineCare members, officials said.

"It’s a bold and decisive-looking budget," said Senate President Beth Edmonds.

Housing assistance—

"This budget restores funding dedicated for affordable housing and for the prevention of homelessness. Full funding for the state HOME program means we can leverage additional federal and private housing resources and create affordable housing for more Maine people," said Maine Housing Director Dale McCormick. "This is great news for Maine’s low and moderate income seniors and families who need safe, affordable housing, and the increased housing activity this money generates will help bolster the state’s economy. Governor Baldacci recognizes that this is a critical moment to invest more funds in housing to address runaway housing costs."

From 2000 to 2005, median home prices rose 67.4 percent, median rents rose 32.5 percent, but median incomes only rose by 14.2 percent.

MaineHousing uses the HOME program money in conjunction with its housing bonds to provide low-interest-rate mortgages (5.3%) to first-time homebuyers and to finance the down payment and closing cost assistance option for homebuyers.

More consolidations

"This budget continues the administrative streamlining initiatives begun in the current biennium, in the consolidation of financial services, human resources, and information technology," said the governor.

A logical merger of the Department of Economic and Community Development with the Department of Professional and Financial Regulation would bring together state business agencies: one that promotes businesses and one that regulates businesses. Many businesses have had to deal with them both; having them under the same roof makes it easier for businesses to obtain what they need with more ease and efficiency. Baldacci said this new Commerce Department would tighten state government’s focus on business.

This plan also brings the Atlantic Salmon Commission into the Department of Marine Resources.

Investing in Maine’s global economy

 "I have proposed an appropriation of $5 million for the Maine Economic Improvement Fund to be used for research and development. Moreover, through the Maine Technology Institute, we will invest $8 million in new innovation clusters that show promising partnerships for economic growth among businesses, research enterprises, and career education, helping to spur Maine’s economy," said Baldacci.

A Research and Development, transportation and Land for Maine futures bond proposal will follow the budget.