Gov. Mills to update lawmakers and public on the state of the state's finances tonight

Feb. 23—AUGUSTA — On a day when she ordered flags lowered to honor Mainers lost to COVID-19, Gov. Janet Mills will update lawmakers and the public on the impact the pandemic is having on the state's economy and state government finances.

Mills, a Democrat, will deliver a pre-recorded message on the state of the state's budget at 7 p.m. She accepted an invitation from the Legislature's presiding officers to deliver the remarks virtually last week and it will take the place of the traditional "State of the State" address, usually given to a joint session of the Maine House and Senate by governors in February.

"The COVID-19 pandemic has taken a toll on our state, as it has every state, taking the lives of loved ones, separating us from our friends and family, and changing how we go about our everyday lives," Mills said in her letter to House Speaker Ryan Fecteau and Senate President Troy Jackson, accepting their invitation to address the Legislature. "But amid these difficult challenges, we have seen the resilience, determination, heart, and the goodness of Maine people prevail — people who care for one another and who are rising to meet this trying moment."

Mills has presented both a new two-year state budget and a supplemental budget meant to keep the state's current spending on track. Lawmakers already are working on those packages, which call for about $8.4 billion in state spending over the next budget cycle, which starts July 1.

Her budget proposal does not increase taxes and includes adding to the state's so-called "rainy day" fund.

Lawmakers are constitutionally obligated to approve a balanced budget by the end of the state's current fiscal year on June. 30.

Since the pandemic hit Maine last March, state tax collections have generally outperformed official revenue forecasts, but Mills has also taken some austerity measures, including curtailing state spending by 10 percent across the board last September. Mills also has been in the political cross-hairs of her Republican rivals over a tax proposal that would not have fully conformed with federal tax policy on Payroll Protection Program loans. Congress, in late December, made the loans exempt from federal income taxes but Mills' proposal only exempts the first $1 million of the loans from state income taxes.

It's a threshold amount that covers most of Maine's small businesses but the difference has drawn criticism from some business groups, while advocates for poor Mainers have also challenged the decision to give profitable businesses a double tax benefit.

Both sides of the issue will likely be listening closely as Mills discusses her vision for Maine's post-COVID-19 economy.

"I care about the people of this great state with all my heart, and I look forward to paying tribute to them and sharing how I believe we can tum back this pandemic and emerge a stronger, better state," Mills wrote in her letter to House and Senate leaders.

This story will be updated.