Editor’s note: This story was updated with new information on Wednesday, July 3 at 11:36 a.m.
AUGUSTA — Democratic leaders in the Legislature on Tuesday said they would push forward a new borrowing package aimed at creating jobs and improving infrastructure around the state.
There was no estimate on the size of a new state borrowing package but Democrats also took the opportunity to criticize Republican Gov. Paul LePage for withholding bonds previously authorized by voters in 2012 and 2009.
According to state Treasurer Neria Douglass, the total of authorized but unsold bonds is about $104.6 million.
LePage promised to release those bonds after the enactment of a bill that would pay off the state’s $183.5 million debt to its hospitals for past due MaineCare services. Legislation to do that was signed into law by LePage on June 14.
“The sooner the governor releases the bonds he’s been holding up for two years, the sooner the Legislature can work to craft a strategic bond package to fill the gaps and strengthen our investments,” Speaker of the House Mark Eves, D-North Berwick, said. “Maine has ranked third worst in the nation for job creation, while Gov. LePage has held critical job-creating investments hostage.”
Adrienne Bennett, a spokeswoman for LePage, said the previously authorized bonds, which would fund the reconstruction of roads and bridges as well as community economic and development projects, are moving forward.
Meanwhile Douglass, also a Democrat, said Monday that the state had enough cash available to provide funds to start all the projects set to begin between July and September.
She said her office was in the process of determining which projects were “shovel-ready” and which could be delayed. She said they had reached out to and heard back from the various project managers and had assembled a list of projects that could be certified for funding.
“We are not going to give any money out until we have an assessment of whether they are restarting and what amounts of money are needed and when,” Douglass said.
Douglass said the state would likely wait to sell the previously approved bonds until later this year in an attempt to get the best interest rates for the state. Waiting until the state’s hospital debt is paid off, which is expected to take place in August, could also improve interest rates for the state, Douglass said.
LePage has said for months his intent was to develop a plan to pay off the state’s large and outstanding debt to its hospitals before taking on any additional debt.
Jennifer Smith, a spokeswoman for state Finance Commissioner Sawin Millett, confirmed Monday that the state had enough funds available in the so-called “cash pool” to pay for projects to begin in July, August and September.
That cash pool, which comes from a variety of cash accounts, would be paid back once the bonds are sold, Douglass explained.
“At some point we will ask the governor for a financial order to expend the monies, but we have to know how much is really still going to happen,” Douglass said.
She said it wasn’t immediately clear whether any projects were significantly delayed or will not go forward because of the governor’s demand over the hospital debt payment.
“At any rate the job of the treasurer is to fund those projects as they need money and we will be doing that,” Douglass said. “The bond sale doesn’t need to happen for those projects to be funded — at least not immediately.”
She said there were also some projects that went forward with alternative funding, including about $1.5 million of community partnership bonds that were earmarked for local dental clinics.
Those clinics found donors to support them but have now requested those funds be reimbursed so the donations could be used for other purposes, Douglass said.
Douglass said that was a legal question that was being considered by the state Attorney General’s office. But there were other small examples of that type of issue emerging.
She also said she couldn’t say the delay over selling the bonds necessarily meant projects wouldn’t get going until 2014.
“There’s a long list of projects and we would have to go through the whole list but I think common sense will tell you that may happen,” Douglass said. “I think you can say there are opportunities lost, but I’m not going to focus on that. I’m going to focus on moving forward.”
But Senate President Justin Alfond, D-Portland, seemed to have little doubt important projects and the associated jobs would be delayed until 2014.
“It is frustrating that the governor’s delay has caused another construction season to pass us by, especially when the construction industry faces some of the highest unemployment,” Alfond said. “People’s jobs are on the line, our roads are crumbling. Our economy cannot wait any longer for this economic shot in the arm. The governor should do what he said he was going to do and follow the will of the people by releasing the bonds.”
LePage Wednesday said he requested the bonds be prepared for sale back in May and Alfond’s criticism was unfounded.
“Justin Alfond should read his mail,” LePage said in a statement. “I wrote a letter on May 23 directing the Democratic State Treasurer to prepare the bonds. I have kept my word to the people of Maine, and I have released the bonds. My administration is working to make funds available while the treasurer continues to prepare the bonds for sale.”
Smith said it wasn’t immediately clear whether the state would have saved money by selling the bonds earlier in the year but did say interest rates were lower then.
What effect the state’s elimination of its debt to hospitals would have on its overall bond rating also remained unclear but it’s possible it will improve it and allow the state better terms on new borrowing, Smith said.
Ultimately all the projects that had requested funding and were approved previously will be funded, Smith said.
She and Douglass seemed to agree that whenever the state looked to bond, it would get the best deal for taxpayers.
“But we won’t know what that is until we sell those bonds at some point in the next couple of months,” Smith said. “It’s hard to predict if the delay will have a huge impact on the interest rates or not.”
Send questions/comments to the editors.
