Maine lawmakers are trying to approve a new two-year state budget before Saturday’s deadline to avert a government shutdown.

Gov. Paul LePage issued a statement Tuesday accusing Democrats of “holding the budget process hostage” to appease labor union and environmental special interest groups.

LePage said he already went beyond his $6.8 billion spending limit in offering a $7.05 billion budget and that Democrats are demanding too much extra spending for schools. The Republican governor is also at odds with Democrats because he doesn't want to implement a voter-approved 3% tax surcharge on households earning more than $200,000.

Maine Gov. Paul LePage opposed any budget plan with new taxes.
Maine Gov. Paul LePage opposed any budget plan with new taxes. Gage Skidmore

“They do not care if their tax-and-spend policies are driving people out of Maine and they do not care about the future fiscal health of our state,” said LePage, who has also held up some voter-approved bond sales in recent years due to objections with Democratic legislators about timber harvesting on state-owned lands and rainy day funds. “Democrats are more interested in kowtowing to wealthy environmental organizations, like Natural Resources Council of Maine and Maine Coast Heritage Trust, than protecting the Maine taxpayer.”

House Majority Leader Erin Herbig, D-Belfast, said in a statement Tuesday that the Committee of Conference was prepared to take up a House Republican caucus budget proposal before the GOP lawmakers reversed course and refused to vote it out of committee. The spending proposal needs to garner two-thirds support for passage since it is considered an emergency budget that takes effect July 1. That would also provide enough votes to override a LePage veto.

Republicans narrowly control the state Senate and Democrats narrowly control the House.

“Democrats have been on the record time and time again and remain clear that this budget must fully fund the state’s share of public education and provide much needed property tax relief, “ said Herbig. “We have also been clear that we are ready to find consensus, we are ready to compromise and we are ready close this budget. This will end when that same consistency and that same dedication to honest negotiations happen from all four caucuses and Governor LePage.”

S&P Global Ratings credit analyst Sussan Corson noted in a June 22 report that the while Maine does not have a history of late budgets, the last two biennium budgets were enacted over a veto from LePage.

Corson said that the state doesn’t have general obligation debt service payments scheduled for the first quarter of the fiscal year that starts July 1. A $26,657 non-GO debt payment is owed July 13. Corson noted that Maine's constitution requires the legislature to appropriate sufficient funds to pay principal and interest of all bonded debt as payments become due and if this fails to happen the treasurer is required to use general fund revenues to pay debt service.

“We do not anticipate an immediate effect on credit quality in the event of late budget adoption,” said Corson in her report. “While not currently envisioned, a prolonged budget stalemate that disrupts operations could have negative implications for credit quality.”

Maine GO bonds are rated AA by S&P and Aa2 by Moody’s Investors Service.

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