Like keeping a healthy sum in a savings account, it’s also responsible for state government to maintain a sound balance in its rainy day fund. For the last several years, the balance has dipped lower than state officials would like. At the end of 2012, the account contained $44.8 million and, at the end of 2013, $59.8 million. Bond ratings agencies would prefer to see around $150 million.
They would also, we’re sure, like to see a government where the legislative and executive branches communicate and collaborate to avoid letting one or two problems snowball into an exponential number of others.
A little more than a week ago, the Legislature voted to sweep $21 million from the rainy day fund — which would drop the fund’s balance down to $38.8 million — as part of a solution to stop a municipal funding crisis caused by Gov. Paul LePage and the Legislature themselves.
LePage’s original biennial budget for 2014-15 had proposed to eliminate municipal revenue sharing — about $200 million. The Legislature countered with a budget that cut a lot of municipal revenue sharing but formed a commission to find a way to avoid slashing an additional $40 million. The commission failed.
The Appropriations Committee picked up the slack but went for the easy out: It booked a total of $40 million, mostly from the rainy day fund and new revenue predicted in recent forecasts that has not yet been collected or claimed for other purposes. All this still falls far short of abiding by the funding levels for municipalities dictated by Maine law.
By pushing off real reform, and once again booking savings it doesn’t have, the government continues to compound its problems. LePage clearly doesn’t like any of this, and that’s fine. He shouldn’t like it. But instead of leading the way toward a solution, he has potentially made the situation even worse.
On Feb. 19, his office wrote an email to State Treasurer Neria Douglass, telling her to not go to the bond market until there is $60 million in the rainy day fund. The problem? Aside from the fact that the two issues — bonds and the rainy day fund — are unrelated, he already approved cash advances to fund projects in lieu of issuing the bonds. It’s normal for the state to draw from the treasurer’s cash pool and then replenish it after bonds are issued in June.
The treasurer’s office has funded more than $50 million of the $84 million that the LePage administration approved. And the money is already being spent — on hazardous substance investigations and cleanup, revolving loan programs for wastewater treatment facilities, highway and bridge construction, health and dental clinic upgrades, energy upgrades at the Maine Community College System. It wouldn’t be fair or make economic, or legal, sense to try to get that funding back.
At the same time, LePage can’t let the cash pool drain. We doubt he wants to find $50 million elsewhere to recapitalize it.
We don’t blame him for not wanting see the rainy day fund dwindle. But by trying to avoid a $21 million problem, he is creating a $50 million one. Talk about compounding problems.
The administration could have helped the Legislature find a way to avoid tapping the rainy day fund by proposing alternatives. It still could, if it’s serious about not letting the rainy day fund dip below $60 million. But going after bonds isn’t a serious answer.
It seems it may be up to Finance Commissioner Sawin Millett to help chart a way forward. “I think there are ways out of this dispute, and I’m committed to trying to find that opportunity and be a participant in the solution, making both the governor and the Legislature satisfied,” he said Friday.
If only all officials showed a willingness to work together to actually solve problems, instead of settling on stop-gap measures that are solutions in appearance only.