FOR IMMEDIATE RELEASE For more information:
November 23, 2009 Jay Finegan, 287-1445
Republicans Saved Taxpayers $196 Million By Standing Firm on Bond Package

AUGUSTA – With the state’s financial condition in dire straits, Maine taxpayers should be grateful that Republican legislators held the line last spring on a bond package. Their tough stance during bond negotiations has saved the state $196 million, according to calculations by the Office of Fiscal and Program Review, the Legislature’s nonpartisan fiscal arm.

Governor Baldacci proposed a $306 million bond issue and legislative Democrats sought a $275 million package. Republicans maintained a solid front, insisting on a total issue of no more than $150 million, which was the final amount.

Although Democrats hold large majorities in both the House and Senate, bond authorizations require a two-thirds vote of both bodies. “We had real leverage in this situation, and we used it to keep borrowing to a level we could afford,” said Rep. Josh Tardy (R-Newport), leader of the House Republicans. “Democrats exerted a lot of pressure for a higher amount, but we insisted on $150 million. They finally agreed, but they didn’t like it.”

Based on the governor’s original proposal and the final figure of $150 million, Republican bond negotiators saved taxpayers $156 million in principal and approximately $40 million in interest charges. The $40 million is the difference between the interest on $150 million versus the interest on $306 million over the 10-year term of the bonds.

“We could not accept the governor’s proposal, nor the slightly lower proposal by the Democratic legislative leaders,” said Rep. Sawin Millett (R-Waterford), the ranking Republican on the Appropriations and Financial Affairs Committee. “We must keep our borrowing to a responsible level that protects the interest of Maine’s taxpayers in future years and ensures that we don’t grow our debt faster than our ability to pay it off.

“In the current economic environment,” he added, “Maine’s borrowing decisions must be guided by common sense. We believe bonds should be targeted with precision to stimulate job creation, improve Maine’s competitiveness and produce long-term infrastructure gains that will benefit Maine people for years to come.”

Voters will decide on pieces of the $150 bond issue during three elections. They approved the transportation package on November 3. Follow-on bond components await the outcome of bond referendums next June and again in November 2010.

The package includes $55 million for road construction and $25 million for economic development, such as $8 million for redevelopment initiatives at Brunswick Naval Air Station. Another $10.3 million is targeted for wastewater and drinking water infrastructure projects, and $18 million is reserved for ocean and wind energy projects and weatherization. Higher education is slated to receive $15.5 million, and $9.5 million will go to Land for Maine’s Future and preservation of working waterfront areas.

Rep. Millett said the $15.76 million in savings on bond interest during the current biennium comprise more than half of the $30 million “placeholder” left in the budget to keep it in balance when it passed earlier this year. “It would be a lot tougher to reach the target if we had not stood our ground on bonds last spring,” he said.

###