In a radio address on Saturday, Maine Gov. Paul LePage targeted a proposed $96 million bond package, saying the state must address its 2013 budget before he accepts any proposal.
The bond package came out of the Appropriations and Financial Affairs Committee on Thursday and includes funding for transportation, water and sewer projects, research and development, and higher education.
The bond proposal will be sent to the full Legislature and then to the governor for his approval.
In his radio address, titled “The Truth about Bonds,” LePage did not say whether or not he would approve the debt package. He did warn that bonds are not the answer to Maine’s problems.
“A bond is a fancy word for borrowing money the state doesn’t have,” the Republican governor said on Saturday.
Maine must first consider structural changes to reduce out of control spending, LePage said. He also points to Maine’s debt owed to hospitals, which totals nearly half a billion dollars, saying the state must continue to reduce that debt before taking on more.
Senate Majority Leader Jon Courtnery, R-Sanford, said in a statement that he “applauds the fiscally responsible approach” taken by the committee to address Maine’s most pressing needs.
The bond proposal conforms to the state’s 5% rule, which provides that Maine’s debt service cannot exceed 5% of total general fund revenues. The package is 5.07% in fiscal 2014 and drops down to 4.17% in fiscal 2015.
Senate Appropriations Committee member Roger Katz, R-Augusta, said in a statement that the panel struck a reasonable balance between the state’s investment needs and its ability to afford more borrowing.
“These targeted bonds will hopefully give us the most job-creation bang for the buck,” he added.
LePage said that the jobs created by the bonds will only be temporary and there are other ways to invest in job creation.
“If we want good-paying careers we must invest in our job creators by reducing red tape, lowering taxes, and making structural change to energy, education and welfare. These are the long-term solutions that can help revive the American Dream for Mainers.”
He closed his address by encouraging legislators to “summon the courage to make the necessary changes to restore Maine’s fiscal health and do the right thing.”
A large chunk of the bond package — about $52 million — would fund transportation projects, with $36 million of that going toward highway and bridge improvements.
Around $20 million would go toward research and development, $7.9 million to water and sewage projects, and $5 million to the Land for Maine’s Future Program. Higher education institutions — including the Community College System, University of Maine and Maine Maritime Academy — would receive $11.3 million.
The proposal is unusual because the Legislature will vote on individual bond bills instead of, as in previous years, a single bond bill that contains all proposed bonds.
If approved by lawmakers and the governor, voters will see the separate bond bills on their ballots in November.
According to Maine’s state bond process, if voters authorize the bond proposals, Maine’s treasurer will issue bond anticipation notes to provide the stream of funding needed for each project. The treasurer will structure and issue bonds, usually in June, to repay the Bans and to consolidate the new debt into a single bond package.
Maine’s general obligation bonds are rated Aa2 with a stable outlook by Moody’s Investors Service, AA with a negative outlook by Standard & Poor’s, and AA-plus with a negative outlook by Fitch Ratings.
