Governor LePage Blames Treasurer Douglass, Dems for Bond Issuance Delays; Treasurer Says Not So Fast…
Governor LePage’s communication skills, and perhaps that of his office, continue to show need of some serious work.
So, let’s take it from the top.
First, the Governor publicly vetoed LD 1546 on May 24. Here is the letter, dated May 23, sent to the 126th Legislature.
Then last Friday (June 14), the Governor sent out the following press release. It needs to be noted that the stresses within the letter are exactly as released by LePage’s office:
- Governor Signs Hospital Bill, Makes Good on Promise to Maine People
AUGUSTA– After promising the people of Maine he would pay Maine’s hospitals, Governor Paul R. LePage has made good on that promise. More than 150 days after first introducing his plan to pay Maine’s $484 million in hospital debt, the Governor finally had the opportunity Friday to sign LD 1555 “An Act To Strengthen Maine’s Hospitals and To Provide for a New Spirits Contract.” He did so with little fanfare citing “it’s simply the right thing to do.”
“Paying our bills is the right thing to do, it’s just unfortunate that Democrats waited so long to make the right decision for the people of Maine,” Governor LePage said.
On January 15, Governor LePage announced his plan to pay $484 million in unpaid Medicaid bills – debt dating back to 2009 – to Maine hospitals. In March, Democrats proposed a “new” hospital plan, which was rejected in Committee. Democrats also claimed the Governor’s bill was unconstitutional before holding the bill up in Committee and refusing to allow a vote. Furthermore, Democrats tried tying Medicaid expansion to the hospital bill in late May, a strategy the Governor vetoed on May 23.
With $484 million debt erased, the Governor said he will issue voter-authorized bonds, including $51.5 million for transportation infrastructure improvements and $53.5 million for conservation, clean water upgrades, and construction and energy efficiency at post-secondary educational institutions.
In a letter dated May 23, Governor LePage requested the State Treasurer to start preparing those bonds for his signature.
“Lastly, as I have said all along, once we have our fiscal house in order, we will be in a position to release the authorized bonds. As a measure of good faith, I am hereby directing the State Treasurer to begin to prepare those bonds for my signature on an expedited basis. I will sign them as soon as this new Governor’s Bill is enacted. I hope she will act quickly to ensure our economy can get back to work,” he wrote.
The Governor has not yet received any information from the Office of the Treasurer.
Governor LePage has consistently said that it is irresponsible to issue new debt without a credible plan to pay the State’s outstanding debts.
Yesterday morning, Maine State Treasurer Neria Douglass sent out a press release of her own:
State Treasurer continues ready to prepare General Obligation Bonds; Calls on Governor to sign budget; Calls on Governor to sign TEFRA sign-offs
AUGUSTA – State Treasurer Neria Douglass stands ready to issue bonds that were authorized by Maine voters in June 2010 and November 2012 as she has been since being sworn in January 7, 2013. The first step in the process is receiving clear financial information on what is planned and ready. “Yesterday we asked agencies what projects are on deck. When we hear back, we can restart the investments that were stopped in June 2012.”
Yesterday, the Maine Information Statement (IS) on current finances and other fiscal matters was made public on the Municipal Securities Rulemaking Board (MSRB) website through the Electronic Municipal Market Access (EMMA) service. This information is used in preparing bonds, and is up to date right now.
“Interest rates are beginning to rise. I hope the Governor will encourage quick turnaround of information. And the construction season began weeks ago. I am ready when he gets us the information we need for sound financial planning,” (said Douglass).
The more time passes, the more work is required to update the Maine IS that is current through May 16, 2013, supplemented to May 30th, and is required to issue bonds.
The Maine Governmental Facilities Authority (MGFA) used the Maine IS to successfully issue lease revenue bonds that sold yesterday, June 13, 2013. The money will be used to complete the Augusta Courthouse and to renovate the Machias Courthouse. The Maine Judicial System asked to have the funds for immediate work in June 2013.
“When evaluating the actual repayment schedule, I saw that Maine would save $1.9M in FY 2014-2015 due to lower costs than originally estimated. I notified all members of the Appropriations committee last week. I love helping Maine and those working for positive change,” said State Treasurer Neria Douglass.
“I call on the Governor to quickly sign the budget just passed responsibly by two-thirds of the Legislature. The rating agencies and financial markets will not look favorably on his actions if he delays or vetoes it.”
Ratings on current outstanding bonds are set and will not change, but ratings on new issues could be negatively impacted by conflict between the Governor and the Legislature. “As I said in January, we can fix this by working together.”
Other projects in Maine are financed by moral obligation bonds that have also been held hostage by the Governor. They need his sign-off. The Maine Health and Higher Education Facilities Authority (MEHEFA), which funds education and hospital projects, and the Maine Housing Authority (MHA), which funds affordable housing projects, are two examples. The Tax Equity and Fiscal Responsibility Act (TEFRA) requires a sign-off, which is performed by the Governor in Maine. This is a ministerial duty he is required to perform just as the Treasurer is required to sign checks for bills that are properly due (In New York City, for instance, bonds of the New York Industrial Development Agency have a sign-off by the Mayor. See Step 6 at http://www.nycedc.com/nycida/application-process).
“Today I call on the Governor to sign the TEFRA notices that have been waiting since last fall. Let’s work together to get Maine back to work while interest rates are still low.”
The Governor has not written to the State Treasurer on these topics. In a veto message to the Legislature he mentions the State Treasurer.
“A veto message to the Legislature is not the right way to communicate with me,” said State Treasurer Neria Douglass. “I expect the courtesy of direct, respectful communication on the important financial needs and conditions of the State. Frankly, the ball is in his court, as we asked his people for information yesterday.”
A letter requesting more information from the Governor’s office yesterday morning has not yet (6pm June 18) received a response; the same letter got the following quick reply from Neria Douglass, with additional information.
“The Governor has not written to me. He sent an email copy of his veto of the first hospital payment bill that included accepting the federal Affordable Care Act MaineCare expansion. We asked what cash is needed to restart the projects he stopped last year.”
Neria R Douglass JD CIA
She sent a second email, moments later:
- “Someone on his staff sent a copy. I am ready. We, MGFA, sold bonds for the court house renovations in Augusta and Machias Thursday, June 13, 2013. We don’t bond until he has the projects ready to go.”
Neria R Douglass JD CIA
Among the information attached was a letter dated May 31 from the Treasurer’s office to Democratic leadership, outlining the status of the previously mentioned bonds.
Here are the emails sent back and forth between Treasurer Douglass’ office and that of Governor LePage:
1. Email from the Governor’s office to Treasurer Douglass
- Date: Thu, 23 May 2013 13:51:19 -0400
From: “Libby, Lance”
To: “Douglass, Neria R”
CC: “Cianchette, Michael”
Subject: LD 1546 Veto Message
“Dear Treasurer Douglass,
Per Michael Cianchette, attached please find the veto message for LD 1546. Please feel free to contact our office if you have any questions or concerns.
Legislative Policy Coordinator
Office of Governor Paul R. LePage
2. Letter from Acting Deputy State Treasurer to Carlton et al
From: Carlow, Kristi L.
Sent: Thursday, June 13, 2013 8:18 PM
To: Carlton, Aimee M.; Garland, Denise; Johnson, Deborah; Jean, Rosalyn R; Feinstein, Judith A.; Mckenna, Mike; Mohney, Kirk; DeHaan, Dirk; Cusick, Debi; ‘email@example.com’
Cc: Rodriguez, Timothy; Douglass, Neria R
Subject: Requests for Bond Funds
“Good evening. In preparation for the continuation of bond projects, please take this opportunity to review your anticipated FY14 cash needs for authorized bond projects. Using the attached spreadsheet, indicate your monthly estimates and forward it back to me as soon as possible, but no later than 6/21/13. You might want to contact your Budget Analyst soon to verify that you will have sufficient allotment when funds are released, as well.
Until we can evaluate departmental needs (from your responses), we will not know when it will be necessary to issue the actual bonds, but we anticipate the cash pool will have sufficient capacity to fund your cash needs for now. For those of you that will be requesting 018 Funds, I will send along the Departmental Certificate soon for completion.
Please let me know if you have any questions. Thank you!”
Kristi L. Carlow
Acting Deputy State Treasurer
Office of the State Treasurer
111 Sewall St., 3rd Floor
39 State House Station
Augusta ME 04333-0039
3. Follow up letter by Acting Deputy State Treasurer Carlow to same
Date: Fri, 14 Jun 2013 12:56:59
“Just to clarify, we are not moving forward at this point. This preliminary step will simply allow us to be slightly more prepared when the Governor allows projects to move forward. Thank you.”
Kristi L. Carlow
Acting Deputy State Treasurer
So, it doesn’t look like the delays are the fault of either the Treasurer nor that of Democrats- but rather that of the LePage Administration.