Bureau/Division/Agency
Governor
Document Type
Sound
Exact Creation Date
3-4-2014
Duration
00:03:41
Language
English
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Rights Statement
No Copyright - United States. URI: http://rightsstatements.org/vocab/NoC-US/1.0/
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Description
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.
Hello, 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.