AUGUSTA, Maine — State Treasurer Bruce Poliquin has submitted legislation to expand his role in fiscal oversight and require far more voter approval of state debt than required today, proposals that are drawing mixed reviews.
“The governor feels, and I agree with him, that anytime the word Maine is attached to a bond, that the moral authority is attached to these bonds, [therefore] the voters should decide about adding that debt,” Poliquin said in an interview. “It is a very compelling argument and I agree with him.”
He said he understands the position of many of the independent boards and authorities, which he currently serves, that from a strict legal point of view the agencies can issue bonds legally now. He said the issue for lawmakers is to find the right balance between voter oversight of bonds they might ultimately be called on to pay for and the laudable goals of the borrowing agencies.
“How do we continue to provide cheap credit for kids to go to college, for folks to buy homes and for economic development or a wastewater treatment plant needed by a municipality,” he said. “These are all for worthy purposes, but the taxpayer could be on the hook.”
Poliquin said the proposal would require all bonds issued by state created agencies be approved by the voters unless the Legislature specifically exempts them from the requirement.
“We need to raise the importance of this issue with the taxpayers,“ he said.
Gov. Paul LePage had been clear that he believes in a strict interpretation of the state constitution that all debt, including the possible debt the state may have if one of the various borrowing agencies defaults, needs voter approval. He said the flap over his budget speech about bonding has been misinterpreted.
“I did not say I would oppose all borrowing,“ he said. “I said I would oppose all borrowing that is not approved by the voters.”
Poliquin said the legislation will spur the debate in the Legislature to determine which borrowing does need voter approval. He believes most should but is willing to listen to arguments. For example, he said, lawmakers have a valid concern that under current bond issuing procedures, there would have to be a lot of elections to send the borrowing proposals to the voter.
“We are exploring ways to authorize multiple bond proposals at the same election, maybe authorization for a couple of years,” he said.
Poliquin’s legislation is getting mixed reviews. Rep. Emily Cain, D-Orono, the House minority leader, said the legislation is sweeping in its expansion of the requirement for voter approval and a provision that would give sole authority to the treasurer to allocate tax-exempt bonding authority given the state under federal law.
“This is a major shift in power for the treasurer’s office,“ she said. “To me this really undermines the authority of the boards set up to oversee the bonding for their programs.”
Cain said limiting the ability of boards and authorities to issue bonds could slow down economic development as agencies wait first for the treasurer to approve their issuance and then have to wait for voter approval at some future election.
“The measures that are proposed in the bill that would transfer authority that currently resides in the legislative branch to the treasurer I think will create pause and there will be some real concerns about that,” said Sen. Richard Rosen, R-Bucksport, the co-chairman of the Appropriations Committee. He said there is input from the treasurer already in the allocation process.
Poliquin said the way that provision is drafted is not his intent. He believes the treasurer should have a greater role in determining the allocation of what are called “private activity” bonds that are used for student loans, housing and various economic development programs.
“The intention here is not to grab more authority by the office of treasurer, it is to make sure there is an additional layer of oversight when it comes to the allocation of this ability to issue tax-exempt bonds,” he said.
He said the current allocation is $278 million in authority a year, and he believes there needs to be greater oversight of the issuing of those bonds to reduce the overall debt of the state and its various authorities that can borrow or bond.
“We have too much debt,” Poliquin said. “We have to be more careful as we look at borrowing the taxpayers could be on the hook for.”
The legislation will be considered by the Appropriations Committee later this session.