EDITORIALS

Of LePage Bondage

Posted Feb. 19, 2011, at 1:59 a.m.
Last modified Feb. 19, 2011, at 2:19 a.m.

State borrowing has gotten a bad name lately, but stopping all bonding — as Gov. Paul LePage said he will do — is shortsighted.

Last week, when he introduced his two-year spending plan to state lawmakers, Gov. LePage said there would be no bonds or borrowing. This week, he went a step further and said he would not sign any bonds to be sold by other state entities, even if the bonds did not obligate the state to repay the funds.

A borrowing package for upgrades at several hospitals and schools has been put on hold, which will delay this work while costing the institutions more money.

The Maine Health and Higher Education Facilities Authority, MHHEFA, is the government entity in the state that educational and nonprofit health care groups must go through under federal law to sell tax-exempt bonds, borrowing money for capital projects at low rates of interest.

Husson University, Colby College, Fryeburg Academy, Inland Hospital in Waterville, Franklin Memorial Hospital in Farmington and York Hospital sought to issue bonds worth $31 million to fund a variety of projects.

They were told last week that the governor would not sign the package. Under federal law, the governor is the “senior elected official in the jurisdiction.” His signature is needed, although the borrowing entities, not the state, have the obligation to pay the bonds.

This differs from general obligation bonds that the state issues after voter approval to fund such things as road work, bridges, university construction and research projects, and land acquisition.

State Treasurer Bruce Poliquin argued that if these “state agencies” got in trouble, the state’s taxpayers would have to pick up the tab.

MHHEFA has bonded well over $2 billion since its founding in 1972. No institution has ever defaulted on one of the authority’s bonds.

By Mr. Poliquin’s rationale — which is shared by the governor — Bangor and Portland shouldn’t be allowed to sell municipal bonds, because since these cities are part of the state, Maine could be on the hook, although the state has no legal obligation to repay municipal bonds.

The governor isn’t denying the projects, he just thinks voters statewide should have a say on whether this money should be borrowed, according to his spokesman Dan Demeritt. “Sometimes it’s inconvenient to stand up for what you really believe in,” he said earlier this week.

Requiring statewide votes for funding for local projects is a recipe for a complete shutdown of expansions and improvements at the state’s hospitals and many colleges.

“When Eastern Maine Medical Center wants to build an addition to its Bangor hospital, and wants to borrow $50 million to do that, it will have to go out to referendum so everyone in Portland and Biddeford can vote on it,” said Bob Lenna, the executive director of MHHEFA. “If there’s no state liability here, why are we spending all this money on statewide referendums? All we’re doing is increasing costs to the state for a philosophical belief.”

The governor is entitled to have strong beliefs, but he shouldn’t punish the rest of the state for them.

SEE COMMENTS →

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business

Similar Articles

More in Opinion