AUGUSTA, Maine — Maine state government was in sync with other public entities around the country this year when lawmakers decided to take a breather from issuing bonds. But for the state’s municipalities, the borrowing went on as usual as they saw a bargain in low interest rates.
For the Legislature, not borrowing was an unusual move. Lawmakers routinely send bond packages to voters annually to fund transportation and sewer upgrades among other educational and economic development bond packages.
But with the economy in turmoil, Republican Gov. Paul LePage made it clear last winter that he supported no new bonds, borrowing or deferred payments of any kind for the next two years.
Still, more than two dozen bills surfaced during the 2011 session seeking long-term borrowing for a range of projects. In the end, those who favored easing the state’s debt load won out and no bond issue package was approved for referendum.
While not unprecedented, it was an unusual move. State records going back to 1951 show only a dozen years in which no bond package was sent to voters.
State Treasurer Bruce Poliquin said the decision not to approve a bond package was part of a multipronged strategy, which also includes tax breaks and regulatory changes, to improve the state’s business climate. There was also a worry about state tax dollars being siphoned off for ever-increasing debt service.
Despite earlier objections, lawmakers appear willing to talk about a bond package next year, and borrowing proposals set aside in 2011 are being carried over to the 2012 session.
House Speaker Robert Nutting, R-Oakland, wants to wait and see what the economy looks like next year before deciding on a bond package.
At the municipal level, borrowing went on as usual, said Eric Conrad, director of communication and educational services for the Maine Municipal Association.
“Municipal leaders in Maine realize that, despite the state of the national economy, borrowing money and investing in projects is wise during a time when interest rates are at or near their historic lows,” said Conrad.
Data from the Maine Municipal Bond Banks, providing Maine’s cities, towns, school systems and other public entities access to capital funds through the sale of tax-exempt bonds, show 34 local governments borrowed funds from the bond bank in 2011.
That compares with 35 in 2010, 27 in 2009, 30 in 2008 and 32 in 2007.
“So the rate of municipal borrowing has been remarkably steady,” said Conrad.