House gives state budget initial approval

AUGUSTA – The Maine House gave all but final approval to the Baldacci administration’s $109 million supplemental plan in a 75-61 vote Thursday night that divided along party lines.

“We’ve preserved the Dirigo health plan instead of using one-time money as recommended by Republicans,” said House Democratic leader John Richardson of Brunswick after the vote. “We looked for other ways to save money in order to preserve health care in Maine.”

After beating back nearly a dozen Republican attempts to amend the budget, Democrats attached two technical amendments and signed off on the proposal shortly before 11 p.m. The tax-and-spending package, crafted by the governor and majority Democrats in the Legislature, now moves to the Senate to receive final enactment later today and be sent to Gov. John E. Baldacci for his signature. The Legislature is expected to adjourn immediately thereafter to permit the bill to become law 90 days later. Lawmakers then will be called into special session by the governor to finish their work.

Although legislators signed on a year ago to the administration’s Dirigo health insurance initiative, much of Thursday evening’s debate sounded as if some lawmakers were initially unaware of the ramifications of the program or had decided the entire issue needed to be reconsidered.

Even the Dirigo program’s source of funding was being challenged Thursday by the Maine Heritage Policy Center, described by executive director Bill Becker as a “nonprofit, nonpartisan research and education center.” Becker said federal law clearly indicated the $52 million in federal funds used by Baldacci to launch the program was never intended for that purpose and instead was meant to alleviate one-time Medicaid shortfalls.

State Sen. Richard Bennett, R-Norway, agreed and has asked U.S. Sen. Susan M. Collins to investigate whether Baldacci had applied the funds inappropriately. A spokeswoman for Collins confirmed that the senator had received Bennett’s request and was reviewing it.

If Bennett’s suspicions are on target and supported by an ensuing investigation from the federal General Accounting Office, Baldacci could be asked to return the money – a possibility that was immediately rejected by the governor’s office. Lee Umphrey, Baldacci’s communications director, said Becky Wyke, the administration’s financial chief, requested a review of federal law from the Maine Attorney General’s Office on whether the state had applied the federal funds to the Dirigo program appropriately.

“[Assistant Attorney General] Bill Laubenstein has indicated that our interpretation of the [law] and the use of these funds are consistent with how other grant funds with similar restrictions are utilized,” Umphrey said, cautioning that Laubenstein’s opinion was informal and not offered to the administration in writing.

House Republicans devoted a good part of the floor debate to attacking Dirigo and the budget evaluation process in the Legislature’s Appropriations Committee that produced a minority GOP proposal and a majority Democratic plan. Although many aspects of both measures are identical, they differ in levels of funding for some programs and completely part company on how each proposal should be funded.

Democrats are relying on what Republicans perceive as gimmick-driven plan that would allow the state to temporarily borrow $10 million from a health insurance fund for state retirees for the purpose of investing in a Medicaid program that would return additional federal funds. The debt would be paid back by July 1, 2005.

“That’s $10 million,” said House GOP leader Joe Bruno of Raymond. “The unfunded liability of the health insurance fund is now $935 million. There’s only $34 million left in the entire fund. How much more are you going to take? Why don’t you just sweep it all?”

Democrats also plan to generate $16.6 million through a new hospital tax on gross receipts, the majority of which would be returned to the hospitals after the state uses the revenue to gain more than 2-for-1 in federal matching funds. Known as a “tax-and-match” policy, the proposal has been roundly criticized as another “gimmick” by Republicans who predicted the tax would result in increased hospital charges to patients.

“When we do this, what we’re doing is taking off the backs of the hospitals the bad debts and charity care they would have otherwise had to pay,” argued House Democratic leader John Richardson of Brunswick.

Republicans prefer to balance the budget by taking $18 million from the Dirigo program, a withdrawal that Dirigo proponents claim would “cripple” the program. Another cost-saving GOP plan would delay implementation of the expansion of Medicaid eligibility slated for July 1 until February 2006. Republicans believe the delay is necessary because the state’s Medicaid program is in a precarious financial posture and cannot afford an eligibility expansion at this time.

But Democrats argued that restricting eligibility would reduce the amount of federal matching funds by $46 million resulting in the denial of health care benefits for many poor Mainers and jeopardizing the potential success of the program.

“Dirigo health is our only option in trying to get us out of the health care mess that we’re in today,” said Rep. Hannah Pingree, D-North Haven.