AUGUSTA – For this year, refinancing the state retirement system’s debt and adding money to the state’s savings account will have to wait. But lawmakers say one of those ideas could come back.

When the Democrat-controlled Legislature in March passed the state budget for the next two years, it included a $450 million borrowing plan. Opposition to the plan was strong, bolstered by concerns about potential military base closings in Maine. A people’s referendum effort to scrap the borrowing was started.

Lawmakers revisited the budget, quickly eliminating $60 million earmarked for the state’s rainy day savings account and $140 million to refinance debt in the state retirement system.

Lawmakers then spent weeks trying to eliminate the remaining $250 million in borrowing. Late last week, the Legislature – voting mostly along party lines – approved $125 million in budget cuts and $125 million in increased taxes. Almost all of the additional tax revenue will come from a doubling of the cigarette tax.

Rep. Margaret Craven, D-Lewiston, who serves on the Appropriations Committee, said the effort to refinance the state retirement system’s debt could resurface, since it could save money. The retirement debt is currently being financed at an 8 percent interest rate; it could be refinanced at 5 percent, Craven said.

But no one’s interested in borrowing to boost savings, she predicted. “We’ll never, ever do borrowing again for any purpose, except to save ourselves some money,” Craven said.

– Bonnie Washuk

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