Let’s balance the budget before taking on more bonds, LePage says

By Mal Leary, Capitol News Service
Posted April 22, 2012, at 2:41 p.m.

AUGUSTA, Maine — Members of the Legislature’s Appropriations Committee will meet this week to consider bond proposals for dozens of programs and projects costing hundreds of millions of dollars but Gov. Paul LePage says it’s too early to even look at borrowing, given the state’s financial status.

“I want them to do some structural changes that are necessary to improve the cash flow of the state of Maine so that we can pay the debt service on the bonds that we sell,” he said in an interview. “We don’t have any money. We can’t pay our hospitals, we can’t pay our bills, how can we pay debt service on bonds?”

LePage said any bond discussion needs to wait until after the 2013 budget is brought into balance, revenues are reforecast and the state pays its bills.

“We do not have a balanced budget,” he said. “We have an $89 million shortfall in 2013. We have to get that fixed first.”

The state has an estimated Medicaid shortfall of $89 million in 2013 but the exact number is in question because of errors made at the Department of Health and Human Services that allowed at least 24,500 Mainers to continue to receive benefits after they no longer were eligible for the program.

“We will need those accurate numbers and the revenue reforecast before we can make any final decisions,” said Sen. Richard Rosen, R-Bucksport, co-chairman of the committee. “What we are doing is starting the process of looking at all of these requests and setting some priorities for what should go to the voters for their approval.”

He said there are always far more requests for borrowing than the state can afford and he sees no difference this year. He expects the panel will set priorities based on a number of criteria, as they have in past years.

“The constraint I think we will confront is what do we expect to see for revenue growth,” Rosen said. “And what can we afford to put into the budgets going forward for debt service.”

Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the Appropriations Committee, said it is important to start work on crafting a bond package even though she agrees it cannot be completed until the committee completes work on the 2013 Medicaid budget and gets a new revenue forecast.

“This is a process that takes time and we need to get started on it and not wait or this session will never end,” she said. “We have a lot of different proposals to review and consider.”

Rotundo, former co-chairwoman of the panel, agreed with Rosen that creating a bond proposal to go to the voters is a process that requires comment from the parties, legislative leaders and committee members.

“We do look at giving a high priority to those bonds that come with a match, from the federal government or from other sources,” Rosen said.

There are several bond proposals before the panel that meet those criteria, such as water and sewer bonds that bring in $9 in federal money for every $1 the state invests in the projects.

The panel also has a transportation bond proposal for highway, bridge, airport and port improvements.

“We also need to look at needs we have that do not have a big match,” Rotundo said. “There are investments we should make in our future that will not have a match, but we still should make the investment.”

Rotundo said those needs may include the Land for Maine’s Future program, research and development investments and bonds for higher education facilities and improvements. She said with historically low interest rates it is a good time to borrow, invest in the state’s future and create needed jobs.

“Give me a balanced budget, let’s see how much money we have left, then let’s talk about bonds,” LePage said.

Bonds require a two-thirds vote of the House and Senate to be proposed to the voters, who must approve them at referendum.

Lawmakers will reconvene May 15.

http://bangordailynews.com/2012/04/22/politics/state-house/lets-balance-the-budget-before-taking-on-more-bonds-lepage-says/ printed on July 29, 2014