Gov. Janet Mills says she will sign the mandatory statewide paid family and medical leave bill into law, citing a desire to avoid the possibility that such a complicated policy proposal would be implemented through a statewide referendum if she does not.

Mills, who has previously expressed concerns about the impacts on businesses and said she would not support tax increases, wrote in a column provided to the Press Herald that she will sign a budget agreement that includes the new program. Her pledges mean Maine will become the 13th state to implement mandatory paid family and medical leave to workers who need time off to care for family members or themselves.

The program’s $25 million start-up costs and program language were included in a budget compromise negotiated by lawmakers early Wednesday.

Mills said in the column that she continues to have concerns about the impacts the added costs will have on businesses and workers, but that legislative amendments will reduce the burden.

“While there is more to do to iron out more details during its implementation, this bill is a historic victory for working people and families across Maine,” Mills said.

The announcement is expected to head off a citizen referendum that could have bigger impacts on businesses.

The Maine Women’s Lobby and progressive advocacy group Maine People’s Alliance have collected more than 80,000 signatures to place a proposal on a future statewide referendum ballot, possibly in November 2024. But the groups have held off on submitting those petitions to see whether the Legislature would create a program, adding pressure for lawmakers and Mills to reach a compromise.

Once launched with state funding – $25 million over the next two years – the ongoing costs of the program would be paid for with a new payroll tax that will be split between employers and employees.

Mills acknowledged that enacting the program could be seen as her going back on her promise not to raise taxes.

“Of course, I still am concerned about added costs on Maine people, regardless of whether that cost is considered a fee-based service or payroll premium, as proponents argue, or a wage tax, as opponents argue,” she said. “After all, I have repeatedly said I am opposed to increasing taxes.”

“But, I live in the real world,” she continued, “and I have to measure my concerns about those costs against the prospect of a referendum that would likely result in a payroll tax anyway – a tax that would be exacted in a way that is not responsive to the interests of Maine’s economy, Maine’s workforce, or our thousands of small businesses.”

Mills made it clear that she had concerns about the original version of the bill, sponsored by Assistant Senate Majority Leader Mattie Daughtry, D-Brunswick. The governor’s office provided a list of proposed changes to make the bill more amenable to the businesses community and many of those changes were adopted in the final version.

Until now, however, Mills had not indicated whether the changes would be enough to win her support.

Some business leaders continue to oppose the proposal, pushing instead for a voluntary program like one in New Hampshire. After the proposal passed the Senate, Quincy Hentzel, chief executive officer of the Portland Regional Chamber of Commerce, said the changes do not go far enough to address the concerns of businesses.

“We came to this process supportive of paid leave, and wanting a seat at the table as the legislative process played out and the proposal was refined into a workable program for all,” Hentzel said. “Regrettably, the current proposal fails to adequately address the major concerns voiced by many of our members. We are disappointed that there has been an unwillingness to bring all parties to the table to find consensus.”

The program would pay up to 90% of a worker’s regular wages for up to 12 weeks for workers who are sick or need to take care of newborns or other family members, among other reasons. Employees would have to work for a business for at least 120 days before they could take paid leave and return to their jobs when they came back.

The program would be funded through a new payroll tax of up to 1%, which would be split evenly between employers and employees.

Businesses with 15 or fewer employees would be exempt from paying into the program, but their employees still would pay into the program and qualify for benefits.

The program, which will require 36 state positions, is expected to cost $18.5 million a year to administer beginning with the 2027 fiscal year. Those costs would be paid by contributions from employers and employees, who would split a new payroll tax of up to 1%.

But the state also would see an additional $2.5 million in payroll costs since it would have to pay into the program for its employees.

Mills noted that paid leave policies differ by state. She credited the bill sponsors, Daughtry and Assistant House Majority Leader Kristen Cloutier, D-Lewiston, for working to tailor a program from Maine’s diverse business base and address many of her concerns, though she added that work remained.

“It is my hope that implementing a paid family and medical leave policy in Maine that accommodates potential hardships for employers will make it easier for people to balance work with life’s unexpected challenges, like caring for a sick child or an aging parent, a change that will support our workforce and strengthen our economy in the long term,” she said.