Maine’s improving fiscal health

In 2011, Governor Paul Lepage stepped into a fiscal mess in Augusta. Revenues were down. Former Governor Baldacci and the Legislature had been robbing Peter to pay Paul, trying to keep various government programs running. Avoiding numerous fiscal realities put Maine in the red. The state’s bond rating was poor. Taxpayers were paying too much for the interest on those bonds and the short-term interest on the capital needed to fund the state’s myriad operations. At one point, the structural debt was in the hundreds of millions of dollars.

Late last month, with little fanfare, State Treasurer Terry Hayes announced that Maine’s average daily cash balance had passed the $1-billion mark — in the black — a rolling figure that was actually a seven-month average.

Hayes, a political independent, went on to state, “There is a pattern that I can see that I believe is indicative of the fiscal benefits of policies that have been put in place under the LePage administration and the people who work for the Governor. The improvement in the economy is a big factor, but fiscal management has made a significant difference in what these numbers look like”.

Today, we have a “rainy-day” emergency general fund with over $120 million (it was $200,000 in 2011), plus the state’s bond rating is much higher for all types of borrowing. From the very beginning, Governor LePage worked to stomp out waste, starting in the Maine Housing Authority, where his administration reduced costs for those most needing assistance, worked with the Legislature to correct the state’s massive unfunded liabilities in its pension funds and coordinated efforts to improve efficiencies in agencies and reduce expenditures. Welfare reforms, a renegotiated liquor contract and paying back the Medicaid debt to the state’s hospitals also improved the state’s fiscal structure.

Compare the state’s responsible governing to the mess in Washington. Despite three years of record tax revenues, the national debt expanded by over one trillion dollars in the past eight years. The nation can’t spend its way out of this hole.

Despite the success to date, many auditors believe the state needs a larger rainy day fund — at least 12 percent of the budget, almost triple the amount set aside now. With various constituencies blaming the Governor for cutting “their” programs, maintaining solvency won’t be easy or without pain.

Staunch Democrat Rep. John Martin, a veteran of decades of budget battles and fiscal accountability in Augusta, gives the Governor his due. “He can’t do it without the Legislature … I would argue that his pushing the Legislature has been helpful in moving the state in this direction.”

Faint praise from an unexpected quarter, but praise all the same. Kudos to Governor LePage and the Legislature for righting the state’s fiscal ship.