Deal struck to end Maine bond dispute between treasurer and governor

Maine Gov. Paul LePage and State Treasurer Terry Hayes reached an accord to end a dispute about bond counsel that enables a June transaction to proceed.

After a short meeting, Hayes Wednesday said she and LePage agreed to allow Dallas-based Locke Lord to represent the state as bond counsel for next month’s transportation bond sale and then issue a new RFP in July for legal services on future general obligation bond deals. The Republican governor had claimed the original RFP was designed to preclude Maine law firms from bidding because it heavily weighted past experience working with other state treasuries and government agencies.

Hayes told The Bond Buyer Thursday said her office stands by the original RFP and only agreed to a compromise because of the urgency of issuing the transportation bonds. The planned June bond sale would include $100 million approved by Maine voters last year for transportation projects, which would trigger $500 million in matching funds, according to Hayes. She said if the RFP had to be reissued before the June bond transaction it would postpone it into the middle of the summer and hamper the state’s ability to jump-start crucial construction projects.

“The construction industry was being held hostage and treasury paid the ransom,” said Hayes, an independent who is running for governor in 2018. “This resolution we offered had nothing to do with the integrity of the RFP process.”

Locke Lord and predecessors it absorbed through a 2015 merger with Edwards Wildman Palmer LLP have a long history working as bond counsel for Maine. The press office for the firm, which has a nearby Boston office, did not immediately respond to a request for comment.

LePage has clashed with lawmakers in recent years over borrowing and held up some bond sales last year while fighting for increasing timber harvesting on state-owned lands. The fiscal conservative governor also threatened to block bond transactions in the spring of 2014 before lifting his objection when the Democratic-controlled legislature agreed not to decrease the size of the state's rainy day fund.

“It is absolutely critical the state supports our construction industry and I appreciate Treasurer Hayes’s cooperation with me to ensure these jobs are not jeopardized,” said LePage in a statement. “Mainers can now get to work on improving our roads, bridges and other infrastructure that is so vital to our economy.”

Maine GO bonds are rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings.