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Hello. This is Governor Paul LePage.

I met many hardworking people in Franklin County’s Salem Township last week during my monthly town hall meeting. Regular folks, who get up every morning, go to work, pay their bills and make the best with what they've got. They are honest, hardworking Mainers that want what's best for their families.

There are thousands of Mainers like them and I'm proud to say that some will be able to keep more of their hard-earned money very soon.

Democrats will argue I gave tax cuts to the rich. It's simply not true. Before my tax reforms, the top income tax rate of 8.5% in Maine kicked in if you had adjusted income of $19,950 for individuals and $39,950 for a married couple. I do not consider this wealthy.

In 2012, 70,000 low income Maine families are being removed from the tax rolls and will not pay state income taxes at all, once the full effect phases in. This is a hand up to Maine’s working poor to help them get back on their feet. So, is it fair to take away tax cuts to those who need it most to pay for a government-run health care program that has increased its spending by $1 billion dollars over the last 10 years?

How many hard working Mainers have received tax breaks from the State during the last decade? Instead of providing relief to Maine's working families government has taxed them – sales tax, tobacco tax, meal and lodging tax, even taxes on meals in nursing homes.

Maine's problem with Medicaid isn't one that can be fixed by raising taxes or demanding other state agencies make up the $221 million dollar difference.

Today, we have more people on welfare than we have paying taxes.

In 2010, Maine had 445,074 income tax filers paying taxes. We had 453,194 individuals receiving State welfare. According to a report by the federal government, Medicare & Medicaid Research Review, Maine is one of 10 states with the highest levels of total personal health care spending per capita.

We've come to a crossroads because we are currently paying for Medicaid bills with borrowed money from the fourth quarter. DHHS will go broke by April if money isn't appropriated.

All I'm asking is for policy makers to have an honest discussion about what we can afford.

One-third of Maine's population receives Medicaid benefits and we've reached a point where the system is no longer sustainable.

There is no more 'stimulus' money that can keep this runaway train on the track.

The federal government is telling us that we must restructure Medicaid services and payments related to housing for people in private non-medical institutions or PNMIs. This alone costs Maine $60 million every year. I don't want to see people lose their homes, so what I propose is the ability for the executive branch to have some authority to work with the Maine State Housing Authority to address this very important issue.

The federal government is right. Medicaid dollars should be allocated for medical use not housing. The good news is there are solutions. I would like the opportunity to work with MaineHousing to find ways to provide more affordable housing to our seniors who need it most.

We are faced with a multi-million dollar deficit that will not go away unless we re-design Maine’s Medicaid program. We must move closer toward a program similar to what most states offer which will help to reduce eligibility and utilization. Most importantly, we must preserve a quality safety net for our most vulnerable.

I’m asking for cooperation from Democrats and Republicans during the next few weeks to help solve this problem. There are two choices – we can kick the can down the road and steal money from other departments to pay for our Medicaid bills or we can take a hard look at the program, re-structure it so it’s a reliable safety net.

I don't take any pride in presenting this Medicaid proposal, because I know no matter what I do there are going to be winners and losers. There is no joy in taking away anything from anyone.

But there is one question I need to ask, why should people struggle in this economy to pay their state taxes while the State of Maine operates far outside the national average in welfare costs? It's a fair question. Maine people deserve an honest answer.

Thank you for listening. Ann and I wish you prosperous holiday season.

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