AUGUSTA – You have to dig through the Maine Legislature’s website to find them all, but a search of current state bond proposals shows Maine House Speaker Sara Gideon has signed on as a cosponsor to bills that would add nearly $750 million to Maine’s existing general obligation bond debt.
The latest debt snapshot from the Maine State Treasurer shows Maine was only carrying $376 million as of June 30, 2018. That number has presumably dropped since then, meaning that if all the new debt Speaker Sara Gideon is sponsoring were to be approved, Maine’s current general obligation bond debt would more than triple.
In total, Speaker Gideon has sponsored seven bills that range from borrowing $5 million up to $250 million each on the full faith, credit and taxing power of the state of Maine. Only one bill has what is called a fiscal note attached to it so far, and that fiscal note says for the $250 million in borrowing proposed, taxpayers of the state of Maine will pay $65 million in interest at a rate of 4.75%, for a total of $315.3 million. That bill is a proposal to create a fund for student loan forgiveness.
The proposals range from municipal culvert programs to building food processing plants and several others. In total, the seven proposals Gideon has signed on to would create $740 million in new debt to Maine taxpayers.
If all the debt Gideon is proposing is approved and then repaid at the same rate and interest as the first proposal to receive a fiscal note, Mainers could expect to pay just short of $200 million in interest on the seven proposals over the next decade, bringing the total principal and interest over $930 million.
Opponents of increasing Maine’s debt levels argue that the interest payments the state is forced to make, in this case that number could amount to almost $20 million per year, are not the best use of the dollars. They argue that the money would be better spent actually paying for the programs and infrastructure that bonds usually cover rather than paying interest for the ability to fund them up front all at once.
To put the proposed cost of the interest on the new bond debt Speaker Gideon is sponsoring in perspective, the interest over a two year period would amount to a greater expense than Governor Janet Mills proposes to spend on the Department of Defense, Veterans and Emergency Management and the Department of Environmental Protection combined.
Constitution, lawmakers must pass general obligation bonds by a 2/3 majority in
both chambers of the Maine Legislature and then the proposal must be approved
by a majority of voters in a statewide vote.
Maine taxpayers are typically on the
hook for paying off bonds in a 5 to 10 year time frame, with interest
rates varying based on the bond market, the state’s credit rating and
the purpose and size of the bond. Maine typically makes payments on bond
debt twice a year.
According to Moody’s Investors Service, tax-supported debt per Maine resident is $900. The national median is $986.50.
debt as a percentage of Maine personal income is 2.0%. The national median is
2.1%. (Moody’s Investors Service).
Maine has no statutory debt ceiling.
Gideon has put her name on more than just new borrowing in this legislative session, in the realm of taxes, Speaker Gideon has put forward a proposal to place a new tax on the paychecks of every working Mainer to pay for a family leave program.
Other states, such as New Hampshire and Vermont are proposing to create similar paid leave programs without any new taxes or tax increases, but it remains to be seen if there will be room for compromise in Maine.
Gideon also sponsored the so-called carbon tax bill proposed by Rep. Deane Rykerson (D – Kittery) which would have imposed a reported 40-cent per gallon tax on gasoline and heating oil when fully implemented. That proposal was pulled back with the sponsor saying he would propose a study group after strong public outcry.