Just before lawmakers on the budget-writing Appropriations Committee started public hearings on everything from cutting spending to raising taxes, LePage announced he would soon unveil a plan to restore $21 million to the state’s budget stabilization fund.

Commonly known as the “rainy day fund,” LePage has said lawmakers inappropriately raided it when they voted to transfer money from the fund to help cover the state’s financial promise to cities and towns. Before the transfer, the fund stood at $60 million.

LePage called the raid “irresponsible and incompetent.” He said $60 million was enough money to run state government for five days. The fund reduction means the state has enough savings to operate for a little more than three days.

The governor said he has asked business leaders around the state how many would run their businesses with just three days of cash on hand. He said the question has help them understand his position on why the fund must be restored.

LePage has said he would withhold about $100 million in voter-approved bonds that he had already authorized, noting that without at least $60 million in the rainy day fund, the state would face increased interest rates that could cost Maine additional “millions and millions of dollars.”

“It is not a slush fund for politicians to use when they don’t want to make tough decisions on the budget,” LePage said.

The governor and Finance Commissioner Sawin Millett offered scant details Tuesday on where they would find the $21 million but said more details were coming within the next two days. LePage insisted he would not release any additional bonds until the fund is restored to a minimum of $60 million.

The Legislature enacted a bill last month that uses $21 million from the fund to partially replenish municipal revenue-sharing to Maine towns and cities. LePage, who last year tried to withhold revenue-sharing for two years, let the bill go into law without his signature.

Senate Majority Leader Troy Jackson, D-Allagash, said that by withholding voter-approved bonds, LePage is acting like a “petulant child” because he didn’t get his way on the state budget last year or a municipal revenue-sharing bill that passed on strong bipartisan votes last month in the House and Senate.

Just hours later, dozens of state officials and representatives from a variety of nonprofit and industry groups offered their views on a slate of proposals before the Appropriations Committee.

In rough numbers, the committee must come up with about $49.3 million in new revenue or spending reductions for 2014 and about $50.3 million for 2015.

Budget-balancing proposals include increasing the cigarette tax, rolling back tax breaks for businesses and extending the sales tax to some tax-exempt nonprofits, such as hospitals.

Democratic leaders lashed back at a news conference Tuesday, saying LePage had not offered a supplemental budget for 2014-15 after the state’s revenue forecast came up short.

LePage was interjecting what amounted to a supplemental budget proposal at the “11th hour,” said House Assistant Majority Leader Jeff McCabe, D-Skowhegan.

“The governor can call it a bill, but at this point in time if you are talking about over $20 million worth of cuts, that’s a supplemental budget,” McCabe said. “The governor doesn’t seem to understand, after being in the State House as long as he has, how this place works, how to work with the Legislature, both Republicans and Democrats. It’s time he caught up, figures out how this place works and starts to act like a CEO.”

State Rep. Peggy Rotundo, D-Lewiston, House chairwoman of the Appropriations Committee, said LePage was the first governor in state history to forgo participating in a supplemental budget process.  

Rotundo said it was inconsistent and “irregular” —  even for LePage, who during the 125th legislative session, when Republicans were in the majority, participated in five supplemental budgets.

LePage drew a line in the sand on a supplemental budget back in September 2013 when he said he wouldn’t issue a proposal to balance any pending shortfall.

Rotundo said part of what her committee was trying to figure out included spending increases proposed by LePage, including salary increases for employees in the executive branch.

“So part of what we are trying to do right now is figure out, of the requests he’s made, what of these are actual needs and what of these things of new spending are wants,” Rotundo said.

Sen. Dawn Hill, D-Cape Neddick, co-chairwoman of the committee, said she welcomed any revenue the governor had found to help balance the state budget, but to date he hadn’t shared any information about that with the Legislature.

“We were never told about that money, or where it is, where it is coming from,” Hill said. “We are the Appropriations Committee and government should be open, transparent and honest.”

Rotundo, who has worked on dozens of budgets, including many supplementals, said that in any shortfall the governor’s office can usually find about 30 percent of the revenue in simple administrative changes.

“That’s information that’s usually offered up by the governor as part of a supplemental budget,” Rotundo said. “So the fact  that he doesn’t share that information with us means that’s additional revenue that we have to fund.”

LePage also said the Legislature did not intend to solve the state’s budget shortfall for 2015 but would offer a solution only for 2014 before it adjourned and would leave the shortfall for 2015 for the next Legislature to fix.

But Republican and Democratic lawmakers on the Appropriations Committee said they fully intended to solve the shortfall for both years.

Rep. Kathleen Chase, R-Wells, the lead House Republican on Appropriations, confirmed her caucus intended to find solutions for both years. Chase said she welcomed the governor’s new participation in solving the problem.

Chase said Republicans included in their list of things to provide funding for in 2015 the $21 million for the budget stabilization fund, “because we knew how important that was to get that back up to $60 million.”

Yet Democrats said they’d been in touch with the bond rating agencies and the stabilization fund is only “one factor” the agencies consider when they determine the state’s bond rating, which ultimately sets the state’s borrowing interest rate. 

Republican lawmakers Tuesday were starting to be briefed by LePage’s staff on where he was going for the $21 million. GOP leaders were being called to LePage’s office as members of his staff were going to lawmakers in what appeared to be impromptu meetings, mostly behind closed doors.

“I won’t tell you it was something we were looking at, that we were trying to find the information on, but now we know why we couldn’t find it, because (the governor’s staff) has it,” Chase said. 

LePage remained firm on not offering a supplemental budget. He said the Legislature was dodging tough budget decisions.

For example, the Legislature’s Appropriations Committee is still considering task force recommendations to create $40 million in new tax revenues as well as a package of more than $33 million in cuts proposed by the LePage administration. Neither proposal has strong support.

“I’m not part of the game,” LePage said. “I haven’t been part of the game for two years.” “(The Legislature) took a budget that was balanced, and there were some tough decisions made. They undid all the decisions and they waffled and they brought out smoke and mirrors and they’re doing this and that and the other thing. … Why would I put in a supplemental budget when the day that I vetoed it it wasn’t balanced? You’re asking me to put a supplemental budget in on their work that wasn’t balanced in the first place.”

Democrats remained firm that they balanced the state budget in 2013 and that revenue shortfalls coupled with new spending, some of it requested by LePage, coupled with federal revenues lost because of mismanagement by the Department of Health and Human Services, was driving the state’s current budget shortfalls.

“It’s the governor who is coming late to the table,” said state Sen. Emily Cain, D-Orono, another member of the Appropriations Committee. “All of this could have been avoided if he would have just submitted a budget. If they are coming forward with a proposal now, that’s fine, but it’s really several months late.”

The Legislature will have until mid-April to complete its work based on the state’s constitutional deadline for adjournment.

A failure to balance the budget, if the shortfall remains, could result in LePage issuing across-the-board spending cuts known as a curtailment order. That, however, is a blunt tool, and under the law must be applied evenly to all state departments. LePage said Tuesday that was not his end-game strategy.

sthistle@sunjournal.com

Christopher Cousins of the Bangor Daily News contributed to this report.

Democratic leaders react to Gov. Paul LePage’s announcement

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