Maine State Senator Peter Mills

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Articles By Peter Mills

2007 Legislature Report

Dear Friends and Neighbors,

Thank you for the opportunity to represent you in Augusta.

With the work of the 123rd Legislative Session half completed, much of what we dealt with is far from finished. We still have to find real solutions to the crisis in health care, high taxes and control over spending.

I drafted and supported several measures to better control the state budget process, but there was not enough bi-partisan support to pass such reforms. On the other hand, proposals I wrote for school budget transparency did become law.

While this year's legislature has earned an 'A' for effort from one commentator and a 'D' for performance from another, it can honestly be said that the Legislature did tackle some of the most difficult issues facing the state with at least some success. Maine's biggest challenges are these:

1. In recent years, Maine's costs for Human Services and Medicaid have been rising at a rate close to 10% a year.
2. Statewide costs for K-12 education have grown at a rate faster than inflation even with fewer kids in school.
3. Maine owns more highways than it can maintain on a 28 cent gas tax.
4. Our health care costs are among the highest in the nation and America's costs are the highest in the world.
5. The state continues to expand retirement benefits for public employees while failing to provide for their future costs.
6. Maine's revenue sources are stretched to the point where people will not tolerate tax increases to bail out state and local governments.
7. Not only are Maine's taxes high, the structure of the tax code itself is out of date.

Many of these issues were tackled in the State House this year with varying degrees of success. You will find more information inside this update and on my website at

It is an honor to serve as your senator.

Truly yours

Peter Mills
State Senator

Cross Fires in Augusta
2007 was a session of financial cross fires that can best be understood through a quick look at recent history. It began in 2004 when the Municipal Association allied with teachers passed a public referendum directing the Legislature to increase by a quarter billion dollars what the state spends annually on K-12 education. The MMA's successful referendum contained no funding source and no limits on what towns might do with the added money. In response, the Legislature crafted LD 1 which spread out over four years a program to raise the state's share of education to 55%. LD 1 set limits on spending for both state and local governments; and it defined for the first time under "Essential Programs & Services" (EPS) what each school district should need (in theory) to provide an adequate education for children. In the spring of 2005, the Legislature first tried to borrow money (over my objection) to fund the new commitment and then settled on a combination of spending cuts and a dollar increase in the cigarette tax. During recent election cycles, the public first voted 37% for the Palesky referendum in November of 2004 and then 46% for TABOR in November of 2006. The message in each case: Cut taxes; limit spending. This was the challenge for the Legislature this spring: How to complete the second half of the four year commitment to increase the state's share of school funding without raising taxes. The solution came in two parts:
1. Schools were directed to reduce the total cost of K-12 education by consolidating districts.
2. For the first time in many years, the Legislature flat funded the Human Services account (including Medicaid).

School District Consolidation
The need for K-12 consolidation was reinforced by a series of independent studies from the University of Southern Maine, the Brookings Institution, the Maine Childrens' Alliance and the State Board of Education. All four concluded that Maine should not be spending $2 billion a year (in combined state & local funds) on 290 separate school units. Maine schools have continued to increase K-12 spending every year at a rate greater than inflation while the student population is steadily declining -- from a peak of 240,000 in the 1970's to 200,000 today and down to a projected 185,000 just a few years from now. District consolidation consumed the Legislature's attention like no other issue in recent years. While the final bill passed on June 6 was not what any one member might have written, it did garner support from 78% of the Legislature. As consolidation rolls forward this summer, people will surely discover issues needing amendment when the Legislature convenes again next January; but given the pressures on Maine's financial systems, it seems likely that the movement toward consolidation is here to stay.

How the Budget Was Balanced
The Governor's draft budget presented in January provided what was required to reach 55% funding for schools but not without proposing new tobacco taxes of $147 million. As spring arrived, the budget fell further behind when revenue projections for 2008-09 dropped by $39 million. Nevertheless, by June 6, the Legislature passed a budget that closed this $186 million gap without raising taxes. This was one of the year's most difficult achievements.

While it is true that inflationary growth alone provided the state with $468 million more for 2007-08 than for the previous biennium, $306 million of this new money was allocated to K-12 education to relieve local property taxes, to fund teacher retirement obligations and to achieve the 55% school funding goal. The remainder was used to fund normal increases in state government (including a modest pay raise for state employees). Meanwhile state spending on Medicaid is now budgeted to drop by $15 million.

Mental Health Costs
The Medicaid reductions were most pronounced in mental health. The state proposes to save about $90 million ($30 million in state funds and the remainder in federal match) by initiating managed care and rate reforms throughout a system that is, at present, chaotically managed. Because the number of people in need of mental health and substance abuse services continues to rise steadily, it may be a major challenge to recognize the projected savings.

Mental Health Reforms
In response to the tragic death of Amy Bruce in Caratunk and the later casualties at Virginia Tech, I wrote two bills that passed into law. One of them makes it easier for mental health workers to communicate with families and caretakers of mentally ill people without fear of violating confidentiality laws. The other creates an improved and quicker process for obtaining involuntary treatment orders when a patient rejects necessary medication because of mental illness. These two measures are both designed to relieve pressures on mental health institutions and to make it easier for patients to move safely and quickly into community settings.

Tax Reform
The Tax Committee's session-long effort to design comprehensive tax reforms reached the floor at the end of the session. The hard work of the committee was overwhelmed by a backlash against the sales tax expansions and other increases necessary to offset a 30% reduction in the income tax and $50 million in property tax relief. The entire package would have produced $140 million in net savings to Maine residents by shifting taxes to out-of-staters. In years to come, this package will serve as the baseline for future work on reforming Maine's obsolete tax code.

Term Limits
The Legislature passed a bill that will go to referendum in November asking whether voters will approve an extension of term limits from 8 years to 12 for all candidates presently eligible to participate in the 2008 elections. It is my personal view that the present 8-year limit is too short for the House but not for the Senate. While the House has suffered from rapid turnover in leadership, the Senate attracts many candidates with prior experience. My bill to extend term limits only for the House was rejected.

Outdoor Wood Boilers
As the result of a compromise reached among wood boiler owners and dealers, Maine Lung Association and neighborhood groups affected by proximity to wood boilers, a law was passed to establish emission standards for new boilers and to direct DEP to adopt rules concerning existing boilers.

These boilers are very popular in Somerset County. Most of them are on lots that are more than large enough to avoid issues with neighbors. The DEP is presently holding hearings to determine what rules on setback distances, stack heights and emissions may be necessary for those situations where restrictions are called for.