Weekly Address of Governor Paul LePage: Raiding the State’s Rainy Day Fund has Serious Consequences

Posted on March 4, 2014. Filed under: Uncategorized | Tags: , , |

Note: Earlier today, Governor LePage held a press conference in his cabinet room “to explain his opposition to Democrats raiding $21 million from the State’s Budget Stabilization Fund, commonly referred to as the Rainy Day Fund.”. Here is the full video.

Portland Press Herald is reporting that the Governor inexplicably seemed surprised to learn how overwhelmingly the full legislature rejected his position on revenue sharing, as they passed LD 1762, “An Act Related to the Report of the Tax Expenditure Review Task Force” handily:

    Asked Tuesday why he didn’t veto the municipal aid bill, LePage offered conflicting responses, first saying that he expected Republicans would sustain his veto, then stating later that he didn’t know that Republicans joined Democrats to overwhelmingly support the bill in multiple roll call votes.

    “Frankly, I thought they were playing politics,” he said. “I really thought that they were just playing politics. If I vetoed the bill … it would have been sustained by the Republicans and they would have turned and said our governor doesn’t care about the communities, he doesn’t care about property taxes. I didn’t realize that they’d go to the point of legitimately robbing the (rainy day fund). I thought that they’d find some other way.”

    The bill, L.D. 1762, passed the House 120-17 and the Senate 33-2. The margin of support belied Republican opposition to the bill, with several lawmakers saying that they feared a vote against the bill would be used to portray them as not supporting aid to municipalities and used against them in the upcoming election.

    When LePage was told that a majority of Republicans supported the bill, he said, “I didn’t realize they did, actually. Republicans voted for this, too? Then, frankly, I hold the entire Legislature responsible. If they did (vote for it), they did an irresponsible move.”

Perhaps the governor wasn’t kidding when he quipped in January that, “I have no power when it comes to this legislature.”

*RELATED: Maine Legislature Overwhelmingly Pass LD 1762, Restoring $40M In Municipal Revenue Sharing
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Here now is Governor Paul LePage’s weekly address, sent out without embargo.

Audio link here: Raiding the state’s rainy day fund has serious consequences

Raiding the State’s Rainy Day Fund has Serious Consequences

During my career as a businessman, I would never empty a company’s savings account to pay one month’s bills. As Governor, I find the Legislature’s proposal to raid the budget stabilization fund to fill a one-time budget hole both fiscally irresponsible and just plain incompetent. The repercussions will cost Mainers tens of millions of dollars in added interest costs.

lepage sots angry selfHello, this is Governor Paul LePage.

I never imagined Democrats would be so short-sighted and fiscally irresponsible that they would raid the budget stabilization fund and endanger the state’s fiscal status.

This fund is commonly called the rainy day fund. It is a financial reserve that is set aside for emergencies, such unexpected revenue shortfalls or interruptions in normal state operations.

It is not a slush fund for politicians to use when they don’t want to make tough decisions on the budget.

Credit agencies want our state to have a rainy day fund at a minimum of 3 percent of our budget. That would be roughly $180 million. These agencies recommend we have 15 days of cash flow in reserve.

Over the past three years, we have struggled to build it to $60 million. That’s only enough cash to run state operations for 5 days.

Now Democrats have cut our financial reserves by 40 percent and take $21 million from the fund. That would leave 3 days of cash flow to run the state in an emergency.

I have repeatedly warned Democrats that taking $21 million from the rainy day fund would harm our state’s credit rating and increase the costs of borrowing. A downgrade in our credit rating would result in higher interest rates, which could cost tens of millions of dollars. Maine’s taxpayers would have to foot the bill.

For Democrats to put this burden on hard-working Mainers is unconscionable.

That’s why we cannot go the bond market until Democrats replenish the budget stabilization fund to its previous level of $60 million. The decision to sell bonds rests squarely on the actions of Democrats in the Legislature.

We have worked for three-and-a-half years to build up our cash reserves, and we just paid off $490 million in hospital debt. This has greatly improved our state’s financial position. Depleting our already limited financial reserves by robbing the rainy day fund is a big step backwards.

Just as a credit score is of vital importance to the average Mainer, the ratings from credit agencies have very real and very serious consequences for our state.

Democrats do not seem to care about fiscal accountability. They just want to spend every dollar in sight so they can focus on buying votes for the election. Then they can dump their responsibility for balancing the budget on the next Legislature.

Playing politics is one thing. But I cannot stand by and watch as Democrats destroy our state’s credit rating and cash reserves. They may not care if being fiscally irresponsible will have a disastrous effect on our state. I do.

That’s why I will submit a proposal to replenish the state’s budget stabilization fund before we talk about going to the bond market. It’s the right thing to do.

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