LePage says Legislature’s use of rainy day fund ‘irresponsible,’ announces plan to reverse it

Posted March 04, 2014, at 11:35 a.m.
Gov. Paul LePage says Maine has only five days worth of money in its Rainy Day fund during a press conference on Tuesday.
Scott Thistle | Sun Journal
Gov. Paul LePage says Maine has only five days worth of money in its Rainy Day fund during a press conference on Tuesday.

AUGUSTA, Maine — Gov. Paul LePage announced Tuesday that he has a plan to reverse what he called an “irresponsible and incompetent” $21 million raid of the state’s rainy day fund by the Legislature, which he said would make him willing to release more than $100 million in voter-approved bonds that he is using as a bargaining chip.

LePage offered few details about his proposal, which he said will be delivered to the Legislature later this week, but said his administration has found at least $21 million in unneeded funds — “It’s really not cuts as much as savings, we hope,” said LePage — that could be used to build the rainy day fund back to approximately $60 million. That’s the amount that was in the rainy day fund, otherwise known as the budget stabilization fund, before the Legislature enacted a bill last month that uses $21 million from the fund to partially replenish municipal revenue sharing to Maine towns and cities. LePage, who last year tried to zero out revenue sharing for two years, let the bill go into law without his signature.

“[The rainy day fund] is not a slush fund for liberal politicians in an election year to avoid making tough decisions,” LePage said. “I didn’t think they’d really get to the point of legitimately robbing that account. I thought they’d look at education a little more seriously and welfare more seriously. I really that that’s where we can make some major inroads.”

LePage said he didn’t know a majority of Republicans helped enact the revenue sharing bill with a 120-17 vote in the House and a 33-2 vote in the Senate.

“If they did, I didn’t realize they did,” said LePage. “So if the Republicans voted for this too, then frankly I hold the entire Legislature responsible.”

Democratic Senate Majority Leader Troy Jackson of Allagash responded by saying that by withholding voter-approved bonds, LePage is acting like a “petulant child” because he didn’t get his way on the state budget last year or a municipal revenue sharing bill that passed on strong bipartisan votes last month in the House and Senate.

LePage argued Tuesday that drawing down the rainy day fund could cause a downgrade in the state’s credit rating, which could cost the state millions of dollars more in financing charges on its bonds. Democrats have said there is no evidence that is true and that LePage himself used $27 million from the rainy day fund to balance a budget bill in 2011. So why does LePage think it is wrong to use rainy day funds now?

“We weren’t going to bond at the time [in 2011] and we knew we were going to replenish it with [revenues]. … They’re suggesting they’re going to replace it after selling the bonds rather than before we go to the bond market,” said LePage in response to a question from a reporter. “That’s the difference.”

LePage said if his new bill is not successful, and if the rainy day fund isn’t built back up to $60 million, he will stand by his promise to not authorize the sale of any voter-approved bonds, some of which he personally spearhead e d. LePage said last month that he will withhold the sale of the bonds until the balance in the rainy day fund reaches $60 million, which marks the second time he has used the bonds to force his will on the Legislature. Last year, he withheld voter-approved bonds dating back to 2009 until the Legislature agreed with his plan to pay hospitals hundreds of millions of dollars of past Medicaid debt.

“I will not do a fiscally irresponsible move because the Legislature wants to get re-elected. … I cannot tank the state of Maine’s credit because of some irresponsible legislators,” he said.

A major conflict brewing in the State House is fixing a budget hole this fiscal year and next. LePage, who has refused to issue a supplemental budget bill on behalf of the executive branch despite every governor in recent memory doing so, hinted at his strategy on this issue Tuesday. He said that he is prepared to keep the Legislature in session past its scheduled mid-April adjournment date — perhaps by ordering a special session this spring or summer — if lawmakers don’t adequately address an approximately $90 million hole in the current biennial budget.

Jackson said the governor is the one causing uncertainty in Maine by using voter-approved bonds as leverage to force through his agenda.

“For some reason he decided not to veto [the revenue sharing bill] but then turned around and stole the bonds from the people of the state,” said Jackson. “It’s ridiculous and unbelievable that a governor that is supposed to be a CEO of this state would continue to do that.”

Assistant House Majority Leader Jeff McCabe, D-Skowhegan, said LePage is out of touch with the Legislature, even his own party.

“When he doesn’t get his way, he threatens elected officials, he holds up jobs and he holds up the economy,” said McCabe. “The governor has come in with an 11th hour budget, calling it a bill. If he’s proposing wide-reaching cuts, that to me looks like a supplemental budget.”

LePage said he will not submit a supplemental budget because the Legislature dodged tough budget decisions. For example, the Legislature’s Appropriations Committee is still considering a task force’s recommendations to create $40 million in new tax revenues as well as a package of more than $33 million in cuts proposed by the LePage administration. Neither proposal has strong support.

“I’m not part of the game; I haven’t been part of the game for two years,” said LePage. “[The Legislature] took a budget that was balanced, and there were some tough decisions made. They undid all the decisions and they waffled and they brought out smoke and mirrors and they’re doing this and that and the other thing. … Why would I put in a supplemental budget when the day that I vetoed it it wasn’t balanced? You’re asking me to put a supplemental budget in on their work that wasn’t balanced in the first place.”

 

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