In a speech at the Maine State Chamber of Commerce’s Leadership Summit at Sunday River yesterday, Gov. Paul LePage promised to sit on tens of millions of dollars in bonds for infrastructure projects if the Legislature approves a bill aimed to restore $40 million in municipal aid by taking money from the state’s rainy day and income tax reduction funds.
Gov says no bonds this year at Chamber dinner. Concern bond rating will drop #megov
— Kathie Summers-Grice (@skibumKathie) February 7, 2014
LePage’s press secretary had previously told my colleague Scott Thistle from the Sun Journal the same thing, saying the governor would withhold up to $100 million in voter-approved bonds meant to pay for infrastructure projects, most of that on roads, highways and bridges. It’s a political play that pits the job-creating transportation bonds against state aid to municipal coffers, which the state’s towns and cities say is crucial to preventing painful property tax hikes.
By doubling down on the bond gambit with the Chamber of Commerce, including the construction trade groups that would benefit most from state infrastructure projects, LePage puts additional pressure on House Republicans — about 30 of whom joined with Democrats Thursday to give the revenue sharing bill a veto-proof majority in a preliminary vote — to change sides in subsequent roll calls.
Republicans had loudly protested the revenue sharing plan on the House floor before the vote yesterday. They and LePage’s finance chief, Sawin Millett, argued that it’s irresponsible to use rainy-day money from the Budget Stabilization Fund to pay the municipalities.
Millett said it would even mean a reduction in the state’s bond rating, which would make it harder for Maine to secure favorable borrowing rates. But in the end, many Republicans opted to advance the bill, leading to a 114-21 vote, showing that they wanted the money for their towns just as badly as Democrats.
It is widely accepted that in the absence of restored revenue sharing, local property taxes will rise. No lawmaker wants to go home to their voters having to answer for that. But neither do lawmakers want to be seen as endangering job-creating bonds, which LePage said in his State of the State Address were part of a plan to create 25,000 jobs over the next three years.
Now he’s threatening to put all that on hold.
Democrats are calling the move a “divide and conquer” tactic; By setting up a “bonds vs. revenue sharing” debate, he puts pressure on Republicans — and Democrats — to rethink their votes on the revenue sharing bill. He’s telling them to choose: Revenue sharing or jobs.
House Majority Whip Jeff McCabe, D-Skowhegan, was at the Chamber event last night when the governor spoke. In an email to the BDN, McCabe wrote: “Gov. LePage is threatening to hold economic investment hostage for no good reason. His divide and conquer strategy won’t work. His message made business leaders very uneasy last night at the Maine State Chamber leadership summit.”
Adrienne Bennett, the governor’s press secretary, said the governor is only reacting to the lawmakers’ proposal in the most fiscally prudent way possible. The bond rating agency Moody’s has dinged the state in the past for its low cash reserves. Releasing bonds while depleting the budget stabilization rate makes no sense, Bennett said.
“We’re pointing out the reality of the unintended consequences of this bill,” Bennett said in an interview. “The governor thinks three or four steps ahead, and lawmakers oftentimes don’t do that. That’s why Mainers are left oftentimes with the unintended consequences of lawmakers.”
It’s not the first time we’ve seen the governor use bonds as a bargaining chip: For three years, he sat on millions of dollars in bonds, saying he would not release them until the Legislature approved a plan to pay off $490 million of Medicaid debt to Maine’s hospitals, saying the state shouldn’t borrow any money until the debt was paid. He released the bonds last summer, after the Legislature passed a budget that included paying the hospitals.
We’ll see whether the governor’s statements change the debate in the House and Senate, where the revenue sharing bill faces additional votes, starting Tuesday.