Rep. Berry wrong to spin Moody’s Outlook Revision
As you may have seen, last week Moody’s revised Maine’s credit outlook from stable to negative.
In the report, Moody’s cited three areas of concern:
- History of recurring budget shortfalls
- Lack of rainy day funds
- Lack of liquidity
Before the day was out, many of the same politicians and pundits who opposed many of the positive reforms cited by Moody’s as brightening Maine’s financial future began to twist the report to fit their own political narrative.
For instance, Representative Seth Berry, a strong critic of structural reform at DHHS and last year’s pension reform measure skipped over all the actual details of the Moody’s analysis and immediately jumped to blaming the revision on last year’s tax cuts and the potential for future tax cuts.
Nowhere in the Moody’s report are last year’s tax cuts explicitly mentioned, let alone cited as a cause of the outlook revision. One would have to assume that because Moody’s did identify other specific reforms that have strengthened Maine’s position, they would have named the tax cut as a point of risk or weakness as well. They didn’t, and so Rep. Berry simply injected his opinion to try and spin the narrative.
Let us not forget, that if Rep. Berry had chosen the path for the Maine budget over the course of the 125th Legislature, we would very likely not have the following reforms which Moody’s DID explicity cite as strengths in Maine’s credit rating:
- Pension reform which eliminated $1.7 billion in taxpayer debt. (Rep. Berry opposed pension reform)
- Resolution of recurring DHHS shortfalls with structural reforms, not one time revenue. (Rep. Berry opposed structural DHHS reform)
- Low debt ratio. (Rep. Berry has advocated for much more borrowing, and the Maine Democratic party roundly criticized the lack of new bond debt last session, while the majority party resisted the effort to increase our debt ratio to Baldacci era levels)
Also, let us not forget that the approach taken by Rep. Berry and his extreme liberal allies in the Maine Legislature are in fact what led us to runaway pension costs; recurring structural shortfalls at DHHS and a state bond debt load that will cost Maine taxpayers almost $100 million in debt service payments in 2012.
While we certainly will hear from the extreme liberal faction of the Maine legislature in the near future how our debt ratio is lower than average and that means we should go “full speed ahead” on borrowing, let us remind you of a couple of points:
- Because Maine didn’t incur any additional bond debt in the first session of the 125th Legislature, we were able to retire a healthy portion of our outstanding debt. It wouldn’t have happened if the extreme liberal faction of the Maine Legislature had their way.
- In 2012, Maine taxpayers will pay almost $100 million in debt service on our existing debt. If just a portion of that was being used to stabilize our Rainy Day Fund or improve the liquidity of the state budget, Moody’s may not have revised our outlook in the first place. If Rep. Berry and the extreme liberal faction of the Maine Legislature had their way, we would be looking at even greater debt service spending in the future, further weakening our liquidity and handcuffing our ability to replenish our Rainy Day Fund.
Simply put, every dollar we spend on debt service, unnecessary spending and runaway welfare spending impacts our ability to strengthen the state balance sheet.
Rather than attempt to spin fool’s gold into yet another taxpayer fleece-ing with the Moody’s outlook, Berry and his allies would do well to reconsider their tax-and-spend and borrow-and-spend policies.
The Moody’s analysis laid it out with crystal clarity to them, all they have to do is pack away their ideology for a short time and examine it with an open mind.
