- Associated Press - Wednesday, January 15, 2014

AUGUSTA, Maine (AP) - More than 90 percent of the $119 million shortfall in Maine’s budget is being driven by the state’s Medicaid program, according to details that Republican Gov. Paul LePage’s finance chief provided the state’s budget-writing committee Wednesday.

Roughly $108 million of the shortfall identified by the administration in the $6.3 billion, two-year budget is in MaineCare, as the Medicaid program is called in the state, Department of Financial and Administrative Services Commissioner Sawin Millett told reporters Tuesday. The Medicaid shortfall - which is smaller than it’s been in past years - is due in part to residential services and hospital outpatient care as well as the failure of some savings initiatives to meet their targets, he said.

Democrats and Republicans have been trading jabs at what’s to blame for the budget gap, which is likely to be one of the biggest issues on lawmakers’ agenda for the short session that began this month.

LePage’s administration and GOP lawmakers says the funding challenges in the Medicaid program further prove why the state can’t handle expansion under the federal health care law. But Democrats have said the problem lies with mismanagement within the Department of Health and Human Services, pointing to issues like the $20 million loss of federal funding for a state-run psychiatric hospital.

The actual hole in the budget comes out to about $132 million, but the state plans to bring in a significantly more revenue than projected, lowering the amount needed to balance the budget, said Millet said.

Some areas where the LePage administration is citing a shortfall is in programs that the governor wanted funded last year but were cut in the final budget. Part of the $3 million hole in the Department of Education budget is $450,000 the governor wants for a nonprofit that aims to keep at-risk young people in school.

“In (the governor’s) eyes, it’s a shortfall because it’s not what he had asked for and what he feels strongly about,” Millett said.

Republicans pointed to the shortfall Wednesday as the Democratic-controlled Legislature began to take up another bill to expand Medicaid coverage under the federal health care overhaul.

The bill would “expand the very program that created the state’s hospital debt and gave us the $119 million budget shortfall we just recently learned about,” said House Republican Leader Ken Fredette of Newport, who argues that the state can’t afford the expansion.

Democrats say the problem lies not in Medicaid spending, but in poor planning by the department. They are seeking details from the administration on the savings initiatives that have fallen flat. Democratic House Speaker Mark Eves of North Berwick said the state would save money from the expansion that could be put toward other programs or shortfalls.

Other parts of the $119 million shortfall include:

- Nearly $11 million for the Riverview Psychiatric Center. An administrative law judge denied the state’s appeal of the federal government’s decision to cut $20 million in funding from the center, but Millett said the health department is hopeful that can be overturned.

- $3.3 million to fund the expansion of a mental health unit at Maine State Prison next year. The funding was included in the budget this fiscal year, but not the next.

- $610,000 the state needs to pay cities and towns for storm damage, like floods and snowstorms.

- More than $1 million for the Judicial Branch, which is citing issues like increased costs for psychological exams.

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