Maine budget panel reaches compromise on LePage’s rainy day proposal, $17M amendment

Gov. LePage speaks about the rainy day fund during a press conference in this March 2014 file photo.
Scott Thistle | Sun Journal
Gov. LePage speaks about the rainy day fund during a press conference in this March 2014 file photo.
Posted March 19, 2014, at 9:24 a.m.
Last modified March 19, 2014, at 4:02 p.m.

AUGUSTA, Maine — The Appropriations Committee has approved Gov. Paul LePage’s plan to replenish the state’s rainy day fund to $60 million and has agreed unanimously to move forward the contents of a controversial $17 million amendment that was previously attached to the bill separately.

Many of the committee’s votes came at near 3 a.m. Wednesday after hours of negotiations, according to David Sorensen, a spokesman for House Republicans.

The committee also gave unanimous approval to a solution for the current fiscal year’s $40 million budget hole, according to Jodi Quintero and Ericka Dodge, spokeswomen for legislative Democrats. The measures will come to the full Legislature for consideration in the coming days.

Quintero said the compromise agreed to on Wednesday morning gives both parties key elements that they have been negotiating. LePage’s rainy day fund bill, LD 1807, in which the governor proposed using about $21 million in excess funds from state employees health insurance accounts and unspent money in the Department of Education, will go to the full Legislature unamended with unanimous endorsement of the Appropriations Committee.

LePage submitted the bill after the Legislature enacted another bill to restore $40 million in municipal revenue sharing last month. Their use of $21 million from the rainy day fund angered LePage, who argued that the balance in that account needs to be as high as possible to protect the state’s credit rating.

LePage, who has said he will withhold the sale of voter-approved bonds until the rainy day fund is replenished, was expected to veto his rainy day bill after Democrats on the budget committee attached a $17 million amendment to it late last week. The amendment restored several cuts that were outlined in the Rosen Report, a $34 million list of recommendations for budget cuts that was developed by former Appropriations Committee Chairman Richard Rosen in LePage’s Office of Policy and Management.

The amendment, most or all of which is now part of a fiscal year 2014 budget fix bill, includes the restoration of $9.6 million for local education; $200,000 for a transportation program at the Maine Educational Center for the Deaf and Hard of Hearing; $4.5 million in merit and longevity pay increases for state employees; and several other items.

Senate President Justin Alfond, D-Portland, and Speaker of the House Mark Eves, D-North Berwick, said the two bills would be processed together.

Alfond also reiterated that the voter-approved bonds could be released by the governor regardless of when the bills are voted on.

“The governor doesn’t need [LD] 1807 to sign off on the bonds that Mainers desperately want to have happen in a timely manner,” Alfond said. “Working with our Republican colleagues, they and we know, that not only do we need to have bonds moving, we need to have balanced budgets, and that’s why we are going to do these together. They are equally important to our state.’

Alfond said LePage should release the bonds immediately.

“He should be having a press conference where you all are saying, ‘great, end of story,’” Alfond told reporters Wednesday.

“We were pleased to be able to come to an agreement that will both pay our bills and prevent cuts to our schools and young children,” said Rep. Peggy Rotundo, D–Lewiston, the House Chair of the Appropriations Committee. “We were able to find common ground and solve our problems despite the challenges we faced with a governor who refused to collaborate for the good of our people.”

Rotundo said the $17 million in restorations that was added into the fiscal year 2014 supplemental budget were all important items to Democrats and their constituents.

“It’s a budget that restores those things that the people of Maine care about,” Rotundo said. “Including funding for higher education, public education and Head Start.”

LePage’s refusal to issue the bonds over concerns about the rainy day fun were unfounded as the revenue sharing bill passed over his veto also contained a mechanism for restoring the funds, she added.

She said Wall Street bonding agents that set the state’s interest rates have indicated the balance in the rainy day fund was not the only thing considered when determining the state’s credit worthiness.

“It is one of many factors that can impact, potentially the bond rating, but when it has been dipped into in the past, it has never impacted our bond rating,” Rotundo said. “Including the time the governor took out a significant amount of money when he wanted to use it for a supplemental budget.”

Sorensen said he couldn’t predict whether House Republicans would vote to override a veto on the 2014 supplemental budget until they met to caucus the bill.

“There will always be a push and pull between Democrats wanting to spend more money and raises taxes, and Republicans wanting to control spending and preserve our savings and credit, but in the end, I’m confident we can work together to complete the work that needs to be done,” House Minority Leader Rep. Ken Fredette, R-Newport, said in a prepared statement Wednesday.

Republicans were also urging Democratic leadership to bring the bill that restores the rainy day fund to a vote quickly to expedite the release of the bonds.

Some Republicans said they were hoping Democrats would allow a vote on the measure Wednesday night.

Sun Journal State Politics Editor Scott Thistle contributed to this report.

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