Gov. Paul LePage has ordered the state treasurer to stop issuing voter-approved bonds, in response to the Legislature’s plan to use money from the state’s rainy day fund to restore aid to Maine’s cities and towns.
State Treasurer Neria Douglass, a Democrat, said the Republican governor’s decision to stop borrowing for critical construction projects, such as repairs and improvements to the state’s ports, community colleges and road system, will harm contractors that are preparing to work on the projects. She said it also sends a message to bond-rating agencies that Maine can’t be trusted to follow through on its commitments.
“This flip-flopping and lack of consideration may hurt us,” Douglass said in an interview Friday.
In an email to Douglass on Wednesday, LePage said he will not approve issuing bonds unless $60 million remains in the budget stabilization fund, also known as the rainy day fund.
“I will not subject the state to further credit reduction,” Le- Page said in the email. “In the past the Treasurer would keep the Governor updated on cash expenditures, you have chosen not to.”
Douglass said LePage’s order came too late to stop her office from issuing $51.2 million in bonds for projects that he had already authorized and that had started to receive money. It will stop her from borrowing for $33 million worth of projects on which LePage has not yet signed off.
LePage, who has a history of not issuing voter-approved bonds, is upset that the Legislature, in a bipartisan vote last week, passed a bill to avert $40 million in state revenue sharing cuts to cities and towns. The measure, which LePage has yet to act on, would be funded in part with $21 million from the rainy day fund.
LePage’s press secretary, Adrienne Bennett, said Friday that Maine’s credit rating is in serious jeopardy because “liberals” want to take money from the rainy day fund to prevent cuts that were pending in revenue sharing with cities and towns.
She said the fund, which now has $60 million, must have at least $150 million for Maine to maintain its good credit rating.
The state will pay higher interest rates to borrow money if it loses its stable credit rating, she said.
“If liberals take money from the rainy day fund instead of making tough decisions, Maine’s credit rating is in serious jeopardy, which hurts Mainers in the long run,” she said.
LePage’s opposition to using money from the fund is inconsistent with his previous actions, said Jodi Quintero, spokeswoman for House Speaker Mark Eves, D-North Berwick.
She noted that in 2011, the LePage administration and the Legislature, which was led by Republicans, drew $27 million from the fund to balance the state budget, which included a $400 million income tax cut.
There is a lot of confusion in the Legislature and the business community about which bonds would be affected by LePage’s order, said Assistant House Majority Leader Jeff McCabe, D-Skowhegan.
He said LePage should take up the issue with the Legislature directly, rather than upend the funding process for voter-approved projects and cause confusion. He noted that LePage has yet to act on L.D. 1762, the bill that would tap the rainy day fund to avoid the cuts to municipal aid.
“If the governor is that upset, he should stand up and veto the bill rather than sneak around and stall our economy,” McCabe said.
LePage’s actions came under attack Friday from his rivals in this year’s race for governor.
Eliot Cutler, an independent, said in a prepared statement that LePage’s refusal to issue voter-approved bonds is just the latest example of his “spit-in-your-eye approach to governing.”
U.S. Rep. Mike Michaud, a Democrat, said Maine businesses and communities deserve a state government that is “predictable and honors its commitments.”
LePage’s chief political adviser, Brent Littlefield, said Michaud and Cutler are rushing to make inaccurate statements, rather than waiting to learn the facts.
“Michaud and Cutler seem more interested in pushing political attacks than solving the real fiscal problems facing the people of Maine,” he said.
Tom Bell can be contacted at 791-6369 or at: firstname.lastname@example.org