AUGUSTA — State Treasurer Neria Douglass says Republican Gov. Paul LePage has told her to withhold issuing nearly $100 million in bonds approved by voters last November.
In an email to Douglass, a Democrat, LePage canceled his authorization of some $100 million of bonds, according to a statement from Senate Democrats. Ericka Dodge, a spokeswoman for Senate President Justin Alfond, D-Portland, said the reason cited by LePage is that he wants to see the state’s cash reserves in the budget stabilization fund, otherwise known as the rainy day fund, reach $60 million before he’ll authorize issuance of the bonds.
The LePage administration did not immediately reply to requests for comment early Friday morning.
LePage has said previously said that he would withhold up to $100 million in voter-approved bonds because of a bill passed recently by the Legislature that restores $40 million in revenue sharing to Maine towns and cities that was cut as part of the two-year budget passed by the Legislature last year. LePage proposed last year in his biennial budget bill to cut revenue sharing completely for two years, but the Legislature restored some of that funding over LePage’s objections.
Lawmakers also agreed to seek alternative revenue sources to restore the $40 million revenue-sharing cut in the budget. A task force could not agree on those measures, so Democrats on the budget-writing Appropriations Committee put forth an alternative plan.
That revenue-sharing bill, LD 1762, would take $21 million from the rainy day fund, which currently has about $60 million in it, as well as $4 million from a fund designed to accumulate budget surplus for the purpose of eventually reducing the state’s income tax and $15 million from surging unappropriated revenues. The bill, which had strong bipartisan support in the Legislature, is on LePage’s desk awaiting action. LePage has been unclear about whether he will veto the bill, sign it or let it go into law without his signature.
According to the Democrats, Douglass has already issued $59 million in funding from the state’s cash pool to pay for a range of projects, money that was to be replaced by the issuance of the bonds.
Sawin Millett, LePage’s finance commissioner, has warned the Legislature to leave the rainy day fund alone.
“It is not sound fiscal policy to dip into the State of Maine’s savings account and further diminish our already limited financial reserves,” Millett said in a written statement earlier this month. “While $59.7 million may sound like a lot of money, it is a minimal reserve for a state that spends more than $3 billion annually. As it stands currently, the State of Maine could operate for less than a week with the current budget balance of the budget stabilization fund.”
The budget stabilization fund could come into play in the coming months if the Legislature is unable to enact a budget bill that addresses tens of millions of dollars in shortfalls in the current fiscal year, which ends June 30. LePage has vowed not to submit a supplemental budget bill — making him the first governor in recent memory to bow out of that process — and the Legislature’s Appropriations Committee is working on developing a bill.
In related news, financial officials are scheduled to update legislators on Friday about the latest data related to state revenues, which will provide a more accurate picture of the budget hole that needs to be filled.