Study: Maine fares well in gaining federal grants

AUGUSTA – A new study indicates Maine does very well in getting federal funds for a wide variety of programs and projects, eighth-highest among the 50 states for the federal budget year that ended Sept. 30.

“Maine does very well overall,” said Matt Kane, author of the study done by the Northeast-Midwest Institute, a Washington-based think tank. “On a per capita basis, Maine took in $1,375 or 36 percent more that the 50-state per capita amount.”

The study looked only at federal grants to state and local governments for various purposes, not federal funds spent in the state on payrolls or to purchase goods and services. The report estimated Maine received $1.753 billion in grants.

While Maine did well, it was second to Vermont among the New England states in garnering federal grant funds. Vermont was fifth-highest in the nation. New Hampshire fared the worse in the region and 43rd in the national ranking.

“Like other states, the biggest single federal program in Maine is Medicaid,” Kane said last week. The study indicates Maine received more than $962 million in federal Medicaid funds, 167 percent above the national average.

“Maine takes advantage of more of the options under the Medicaid program than many other states,” said State Economist Laurie LaChance, “so I think that is part of why we do so well compared to other states.”

Medicaid provides health care to the poor and also pays for nursing home care for many older Mainers. The program is a joint federal-state program with the feds paying 67 percent of the cost. Nationally, the federal share can be as low as 50 percent and as high as 83 percent.

LaChance said the Department of Human Services has done a good job of maximizing the use of Medicaid to stretch state funds. She said some states might not have the staff resources to take full advantage of available federal funds.

Another state agency that has done well in getting federal funds is the Department of Transportation. It was successful in bringing more than $142 million in highway planning and construction funds to the state. That is 117 percent of the national average.

But the agency was not so successful in some transportation programs, such as the Federal Transit Urbanized Area Formula grant program. Maine received just over $4.4 million, less than a third of the average per capita grant.

“In many programs, Maine or other rural states are at a disadvantage because they are written to help urban areas,” Kane said. “And for some, the state simply does not qualify at all.”

For example, there are several programs for which the criteria are so specific, say a certain geographical area like Appalachia, that Maine receives no funds at all. Others require a certain population density and that limits the amount the state can receive.

“And some programs are based on income and poverty factors, “Kane said, “or a combination of factors.”

But there are concerns about all that federal money paying for programs in the state. University of Maine economics professor Ralph Townsend cautions many grants have terms and conditions and those can prove too expensive to a small town or a small state agency.

“Some require a match,” he said, “and there are record-keeping requirements and other paperwork required on these grants. It’s not free money, there are strings attached.”

Townsend said many small towns do not apply for federal funds for various projects because the requirements are too stringent. And, he said, with few professional staff many small communities only have the capability to fill out the forms for projects that have a high priority for the town. He said the same is true for small state agencies.

“And with those federal funds there comes the possibility Congress will decide a particular program is no longer needed,” he said, “and then the state or town must decide whether to use local taxes, or maybe raise taxes, to keep a program.”

Gov. Angus King agreed. He said there is always pressure to start a new program or expand a service because federal funds are available. He said he generally favors getting as much money as possible from federal sources to build infrastructure, but grants used to hire staff are another matter.

“For example, if you get money for three years to hire domestic abuse prosecutors, at the end of the three years the federal money goes away and then the state has to pick up those prosecutors,” he said.

King said those federal programs that provide “seed” funding to start a service the state or town then is expected to pay for should be considered carefully because of their long-term potential fiscal impact. He said while those programs are smaller than the largest categories of federal funds, Medicaid or money for highway improvements, they can be significant and are attractive to groups seeking to address some problem.

“Where there are needs, and advocates,” King said, ” you can get pretty battered around the head and shoulders around here for not taking federal grants that are available.”