Maine Gov. Janet Mills is floating a compromise bond package in an effort to steer borrowing proposals for state infrastructure and workforce development onto the November ballot.
Mills called for a special legislative session Monday morning in an attempt to approve $163 million of bond measures before an Aug. 30 deadline to go before voters on Election Day. The first-year Democratic governor initially had
“This revised proposal is a fair compromise that should garner bipartisan support in the Legislature,” Mills said in a statement. “I am asking lawmakers to take advantage of low interest rates, pass these critical bonds and send them to Maine voters for their consideration this November.”
Two months ago, state lawmakers approved a $7.98 billion two-year budget that was slightly smaller than her initial $8.04 billion proposal. The 2020-2021 biennial budget was reduced after Republicans raised concerns about the spending plan being “unsustainable” because it didn’t take into account revenue scenarios that would occur under a potential economic downturn.
The latest bond package would keep Mills’ original proposal for $105 million to fund transportation spending on roads, bridges, ports, rail and airports. The transportation bonding would draw an estimated $137 million in matching federal and other additional funds.
Maine Department of Transportation CFO Karen Doyle said approving the $105 million transportation bond is essential in order to continue the state’s highway repair program. The bonds are expected to fund 20% of the state’s highway department funding in the 2020-2021 budget cycle, according to Doyle.
“The bonds are vital to the highway and bridge program,” Doyle said. “It is a vital source of funding.”
Mills has scaled back other bond proposals, with her latest bond package proposing $20 million of borrowing to replenish the
A $23 million bond Mills wants to put before voters would fund $15 million for expanded broadband access along with $4 million apiece for workforce development and modernizing National Guard facilities. Mills previously wanted to invest $50 million of borrowing for broadband enhancements and $19 million toward workforce development.
Another $15 million bond proposal to fund pollution cleanup and energy efficiency loans will also be considered by the legislature. The plan includes $5 million to improve wastewater infrastructure at the municipal level and would draw down 150% or more in matching funds.
“Between making vital repairs to our roads and bridges to investing in Maine’s future, each of these bonds is important for Maine people and the state to thrive,” Maine Senate President Troy Jackson, D-Allagash, said in a statement. “It’s why I’m looking forward to returning to Augusta on Monday to approve these bond proposals and giving voters the final say on these critical investments.”
Support for future bonding by Mills is a major contrast from previous Republican Governor Paul LePage, who regularly intervened to prevent the issuance of voter-approved debt. During LePage’s final year in office, he blocked the closing of two already priced general obligation bond sales in June because of spending concerns.
John Bott, director of communications for Maine House Republicans, said that the $105 million transportation bond has support from the GOP and will meet the necessary two-thirds approval threshold to reach the ballot. He said Mills’ bond package failed to advance in June because Republicans wanted to vote on the borrowing proposals separately and Democrats insisted on lumping together all of the spending items. The legislature will now vote on four individual bond plans.
“The plan we supported, authorizes the issuance of bonds for projects such as reconstruction and rehabilitation of highways, bridges and culverts and for facilities or equipment related to ports, harbors, marine transportation, freight and passenger railroads, aviation, transit and bicycle and pedestrian trails,” Bott said. “It is unclear whether any of the other three proposals will pass because Republicans are concerned that Democrats already spent 99.995% of all available state monies (including the surplus accumulated under Governor Paul R. LePage) on a state budget that increased 11%.”
Maine State Treasurer Henry Beck said the state is well positioned to pursue bonds this year because of low borrowing costs. All bonds passed during the special legislative session day will appear on the Nov. 6 Election Day ballot. Mills' original bond package would have put $189 million up for a vote this year with the remaining $50 million of borrowing decided in 2020.
"Market conditions suggest the Legislature is well-advised to give voters the option of approving bonds the state could take to market at the right time," Back said. "Historically low interest rates and high demand for municipal bonds put our state as a seller in a strong position to finance projects at extremely low costs."
Whether Mills gets the necessary two-thirds support for bonding remains uncertain heading into the session. Some lawmakers, including Mills' fellow Democrats, have spoken out against the bond proposals.
"While I strongly support funding our roads and bridges, borrowing against future sales and income taxes is NOT the way to do this," state Rep. Seth Berry, D-Bowdoinham, wrote
Maine has a track record of passing bond measures during the last eight years. Since 2011, all but one of Maine’s 36 borrowing proposals totaling just over $1.1 billion in value has been approved. Going back to 2001, only three of 57 bond issues have been rejected.
Despite the strong support Pine Tree State voters have shown for bonds, Adam Crepeau, a policy analyst for the conservative-leaning Maine Heritage Policy Center wrote an Aug, 19
“Since 1980, approximately $604 million taxpayer dollars have been used to pay the interest on general obligation bonds while $206 million has been spent on interest for transportation bonds – $810 million in total," Crepeau wrote. "Worse yet, when you include the principal amount borrowed, data from the Office of the State Treasurer show that taxpayers have foot the bill for a total of $3.4 billion in borrowing since 1980."
Moody's Investors Service and S&P Global Ratings both affirmed Maine's general obligation bonds in May at Aa2 and AA, respectively, with stable outlooks. The adopted 2020-2021 budget anticipates as much as $300 million worth of bonding over the two years.
"Responsible and predictable bonding allows us to tackle the fundamentals, like road and bridge maintenance, but is also a chance to invest in our state's future,” House Speaker Sara Gideon, D-Freeport, said in a statement. “Securing needed investments in broadband expansion, conservation and environmental protection will help drive Maine forward and help determine our economic success.”
