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Maine Gov Says He's Ready to Approve Transportation Bonds
06/18/2013   Reported By: Jay Field

Maine needs to issue more than $100 million in voter-approved bonds quickly, if it hopes to get favorable interest rates and head off any damage a budget stalemate could inflict on the state's credit profile. Gov. Paul LePage says he's ready to approve them, now that Medicaid debt to hospitals is being repaid. LePage says he asked State Treasurer Neria Douglass to prepare the bonds weeks ago and hasn't gotten any response. But Douglass says it's the LePage administration that first needs to tell her which transportation and infrastructure projects they're green lighting, and how much they cost, before she can go ahead and issue the bonds to pay for them. Jay Field reports.

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Neria Douglass follows a very simple philosophy when issuing bonds. "Bottom line is, we don't borrow money until we need it. It costs money to borrow money."

Now that the hospital debt is out of the way, Douglass says the state has a financial incentive to issue long-delayed bonds as quickly as possible. Interest rates are rising. So late last week, Douglass reached out to the LePage administration. She asked top officials at several state departments, including transportation, what projects were top priorities and shovel
ready.

"The status is. we're waiting for the governor, and the branches that will utilize these funds, to tell us how much they need, and when," she says.

But when LePage signed the hospital repayment bill last Friday, his office put out a press release suggesting it was Douglass's job to get the ball rolling. LePage noted that he'd asked the treasurer to expedite preparation of the bonds in late May and hadn't heard anything from her office.

LePage's spokesperson, Adrienne Bennett, declined to be interviewed on tape for this story. But she says the administration is working to establish which projects are priorities, which still need funding, and what the next step should be. In some cases, Bennett says, bonds may not need to go out right away.

"A day or a week from now wouldn't matter as much as the fact that we need to get them out there," says Dana Connors, who heads the Maine State Chamber of Commerce, a strong supporter of the more than $100 million in bonds approved by voters in 2010 and 2012.

Connors says there's really no other way to finance the kind improvements to roads, bridges and other infrastructure that the state needs to make on a consistent basis.

"They do need to be controlled. But I think the case to be made in Maine is that we are conservative," Connors says. "We're conservative in terms of the length of time that we amortize; that we, by practice, consistently have retired more than we issue in bond debt, that the market is very attractive."

How attractive, though - at least in the short term - may depend on how quickly the governor and the Democratically-controlled Legislature can reach a deal on a new state budget. In an interview Monday with the Portland Press Herald, Sawin Millet, LePage's finance chief, said the state must first enact a new budget before it can authorize the voter-approved bonds.

But Treasurer Neria Douglass says a prolonged budget impasse between LePage and the Democrats could hurt the state's standing with the ratings agencies. "That creates a credit negative, or a negative, atmosphere for selling the bonds," she says. "We could still sell them, but we'll take a hit."

And it's not only the sale of the voter-approved bonds that would suffer. Maine would also be forced to accept less favorable terms, as it sells revenue bonds to pay off all that Medicaid debt owed to hospitals.



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