Gov. Janet Mills’ budget chief warned Tuesday of a $118 million gap in MaineCare funding immediately confronting lawmakers returning to Augusta.
As the Democratic-controlled Legislature returns to work Wednesday, it will need to tackle a “perfect storm” of factors to stabilize MaineCare costs while the state also faces a projected $450 million shortfall through fiscal year 2027, Finance Commissioner Kirsten Figueroa told legislative leaders and members of the budget committee in a Tuesday memo.
The MaineCare funding gap takes priority as it applies to the current fiscal year and results from growth in enrollment in the state’s Medicaid program, an increase in the use of its services after the COVID-19 pandemic and overall cost increases due to inflation and workforce challenges, Figueroa said.
“Any one of these factors on their own would not present significant budget difficulty, but, when taken together, create a perfect storm that must be addressed to stabilize MaineCare costs into the future,” Figueroa wrote.
Along with introducing a two-year budget this month, Mills, a Democrat, plans to introduce a budget adjustment for the current year that will use an upgraded revenue forecast of $202.2 million to cover the MaineCare gap.
Cost was the major reason that former Gov. Paul LePage resisted expanding MaineCare, the state’s version of Medicaid, under the Affordable Care Act. He held out even after voters mandated it in 2017. Mills replaced him the following year after campaigning on a pledge to implement expansion, which she did in the first days of her tenure.
However, a majority of states are facing Medicaid funding issues due to increased enrollment and costs after the pandemic and flattening state revenues after years of growth. Federal funding for various programs has also declined from pandemic highs, Figueroa noted.
The latest budget warning comes after Mills has clashed with Democratic lawmakers over spending, with dozens of bills failing to pass on the last day of the session last year after Mills refused to sign them by warning they would push the state budget to the “breaking point.”
The revised December forecast from a state commission found revenues are projected to be $11.22 billion through 2027 while the state’s expenditures to maintain existing commitments are about $11.67 billion, resulting in a gap of $450 million that lawmakers will have to close in the two-year budget.
Senate Minority Leader Trey Stewart, R-Presque Isle, said Tuesday’s memo supports his belief the state has a “spending problem.”
“But let’s not forget how we got here. Over the past few cycles, Democrats have sidestepped Republicans to pass their own majority budgets,” Stewart said. “They still have the majority, so the question is will they work with Republicans this time to solve it?”
Sen. Peggy Rotundo, D-Lewiston, and Rep. Drew Gattine, D-Westbrook, the chairs of the Legislature’s budget committee, said in a statement they look forward to receiving the “full details” of the governor’s budget proposal and hearing from the public during a “robust committee process.”
“Our commitment is to work collaboratively with all members of the committee to ensure a responsible budget that addresses the challenges Maine people are facing, including meeting their health care needs,” they said.