Inside Maine: Governor's bond moves 'incoherent'

When Gov. Paul LePage took office, he made it clear he doesn’t like debt – really doesn’t like it. Rather than the routine financial transaction it is for most states, businesses and families, LePage spoke as if borrowing money were morally damaging. Still, at the time no one knew how far he’d go to slay the debt monster, never mind the cost to the economy or the democratic process.

LePage laid down a marker early on: Debt issued by quasi-independent agencies such as the Maine Bond Bank and Maine State Housing Authority was suspect, he said, because voters hadn’t approved it. These bonds are different from the ones we approve in referendum; they don’t pledge the state’s “full faith and credit.” That cut no ice with LePage, and his allies quickly replaced the long-time head of the bond bank, and later forced out the director at MSHA.

Still, one presumed bond issues that had been approved by voters were safe, but they weren’t. In June 2012, LePage decreed that bond issues approved by the voters in 2009-2010 but not yet issued by the state treasurer were on hold.

This was stunning. The state constitution and statutes provide no role for the governor in creating and issuing bonds. The Legislature must propose them by two-thirds, and the voters ratify or reject them. The treasurer then issues bonds when he or she sees fit -– usually tied to interest rate cycles. True, the governor signs the warrant, but no one imagined that meant he could block their sale.

By scuttling bonds approved under the previous administration, LePage threw a monkey wrench into a wide range of development projects. Some could find alternatives, but it was a huge struggle for the Communities for Maine’s Future program, an innovative effort to fix up small, rural downtowns – generally LePage country. Some $3.5 million in state funding was matched by $7.5 million locally. By the time LePage pulled the plug, some checks had already gone out.

Even worse off was the ever-popular Land for Maine’s Future program, where bonds are the only revenue source. LMF had land agreements ready to go through a $9.75 million land conservation bond; voters later approved another $5 million LMF bond in 2012, but that is also on hold.

Now, as it happens, Maine has guidelines for how much debt to carry. In the late 1970s, when interest rates soared and debt ballooned, the Legislature adopted two rules. The first, a temporary measure, capped new bonds at 90 percent of those being retired. The second imposed a 7 percent cap on the proportion of the budget devoted to interest payments.

Since then, Maine has stayed well below the cap –- generally 5 percent. But that wasn’t good enough. The governor created the LePage rule –- interest couldn’t exceed $100 million a year.

To see how arbitrary this is, take the current year’s interest costs, $98.5 million. It represents 3.26 percent of overall spending. We could double interest costs and still be below 7 percent.

With the state economy still flat, one usually uncontroversial technique for revival is public investment. Borrowing rates are at record lows, and one might expect a bond package comparable to the one approved by voters in 2009-10, seven bond issues totaling $194.3 million. Instead, the 2012 package, a year late, totaled $76 million, and won’t be issued until next year unless LePage relents.

Until recently, LePage’s position, however questionable, was at least consistent. Then he decided borrowing really was OK, with a twist. He suggested Maine use proceeds from a future 10-year liquor contract to float a bond to pay off hospital bills, and also borrow $100 million for state prison construction. If the Legislature did that, he’d relent and issue bonds approved from 2009-12.

Incoherent is probably too kind a word for this maneuver. Does LePage really think borrowing for a state prison is more important than the $51.5 million transportation bond already approved, but still unissued? Borrowing to pay off hospital bills, meanwhile, sounds a lot like taking on more debt.

The governor’s actions have retarded economic recovery, and violated the process by which bonds are proposed and approved. At the very least, the Legislature should enact proposed legislation to formally remove the governor from issuing bonds, since he’s misused his authority. As for what will happen by June, when another bond package may be approved, it’s hard to see what role the administration can play.

To participate in the debate, LePage would have to have a plan. And it becomes increasingly clear that this administration has no plan.

Douglas Rooks is a former daily and weekly newspaper editor who has covered the State House for 28 years. He can be reached at drooks@tds.net.

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Comments

Steve  Dosh's picture

Inside Maine: Governor's bond moves 'incoherent'

Doug, 13.02.25 22:22 hst
. .The guy is penny wise and pound foolish . Plan ? You must be joking . This is some one who has apparently lived hand to mouth since the Great Depression and offers up 19th century solutions to 21st century problems . We , the loyal readers , question his intelligence , veracity and wisdom, on a daily basis . Our federal C E O is appealing to U S State Governors for help resolving the intransigance of the G O P , in general
Your governor probably does not know what the word means
On a slightly different note , someone had better follow the money trail in his paranoid delusional case and look closely at his taxes and such . We understand his likes to party in your Blair House ( i hope i have that right , i am in Hawai'i ) , he enjoys Dirigo Health Care ® and is set to receive a nice pension and annuity for the rest of his life . These are all concepts he opposes for the layman . Unions ? Forget it . This is good way to demoralize and P O everyone working for your state government , also . As an aside, when i worked for the US Federal Govt. we could - not - use US taxpayer money to purchase liquor . Does he ?
Mainers , your Hon Gov. Lepage is having his cake and eating your's too
One can respect the office without necessarily respecting the office holder
The man is laughingstock to the rest of the nation
hth ? Steve , HI

CLAIRE GAMACHE's picture

Hostages

The governor is in effect holding the Maine economy hostage. Until he gets a deal that will reward the hospitals and some liquor company,and a prison construction company of his choosing the Maine economy and the voters who have approved those bonds can wait. It is nothing more than crony patronage. This is a tactic used by bullies which oftentimes ends up with someone going to prison. The legislature should stop his games and take away this misused authority. You have to wonder how he can say with a straight face that he is against borrowing and at the same time promote two huge borrowing bills that have not been approved by the voters. But then when it comes to crony corruption this governor has already shown his mettle.

Steve  Dosh's picture

Hear here Claire ! The guy

Hear here Claire ! The guy is a plain 'ole , garden variety cynical bully . It's too bad he was abused as a child but he does not have to take it out on everyone else in your fair state • /s, Steve , HI

FRANK EARLEY's picture

It's about time.....

I'm so glad people are starting to see LePage for what he really is. Ever since he started this crusade to ruin every life he could, in the interest of saving money. I knew it would only be a matter of time before victims of his careless approach to health care and debt consolidation would speak out. As long as LePage insists on following the playbook set fourth by the "Tea Party Republicans", and insists on following the idiotic Republican agenda, where all in a sinking ship.
Yesterday morning I read a very disparaging article about LePage's treatment of Medicaid patients in the Boston Globe. About people who are currently undergoing cancer treatment to save their lives, treatment that very few people I know could afford. People who LePage feels, earn to much to qualify for his Medicaid. He feels that if a family earns a small perceptive point higher than what the State considers "Poverty" then they can fend for themselves. I make more than what they consider poverty, a lot more, and I still need my medicare and private insurance, I wouldn't be able to afford LePages idea of health care.
I used to compare Paul LePage with the infamous "Boss Tweed" character. Now I'm beginning to feel there might be another lost family genius, "Jethro Bodine" comes to mind. Has anyone checked to see if Lepage has done "gradiated sixth grade"? For you younger people, ask your parents. You'll soon see the connection.

Betty Davies's picture

LePage does have a plan

He does whatever the Heritage Foundation and other right-wing extremist groups tell him to do, even if the orders arrive by unsigned fax. And especially when the orders make no sense and even hurt Maine and its residents.

Steve  Dosh's picture

22:50 hst Monday Frank , you

22:50 hst Monday Frank , you know it better than most , you , Rex , and Ron , Doug , Claire , Pattie , the lovely Bettie Davies , and many , - m a n y - others also . G E D . Get' Er Done. .er. .Government Equivalency Degree ? ( High School ) Y'all see through him like a glass of water . Smart as a box of hammers •  Some one ought to just tell him , ' If you don't get it , you just don't get it ." They are bunch of dumb sore losers , these cynical and obstructionist Republicans , aren't they ? Bonds are a difficult concept to grasp , Susan & Olympia . Without bonds , the sewage will be running down Lisbon St. again in a week or two when the next sewer pipe ruptures , Mac
" Yesterday morning I read a very disparaging article about LePage's treatment of Medicaid patients in the Boston Globe. ." Parenthetically, LSJ ® readers , let's hope the Globe ® survives . I used to deliver the Globe ® , the Herald ® and the Advertiser ® , the WSJ ® and the NYT ® . The Christian Science Monitor is no more . hth ? /s , Steve , former paperboy and http://www.brookings.org analyst :)

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