Support Veto of LD 225 $20 Million Taxpayer Debt
As you may have read late last week, Governor LePage vetoed a $20 million research and development bond proposal. Tomorrow, the Maine Legislature will consider overriding this veto and sending the bond out to voters for approval.
We want to provide you with some facts about Maine’s current debt situation and this bond so you can make your voice heard with your legislators regarding this bond and help you be more informed regarding Maine’s overall financial situation so you can help us by educating your friends and neighbors.
Here are a few facts about Maine’s current bond debt and general debt situation:
- Currently, Maine carries approximately $10 billion in total debt on our books. This is in the form of taxpayer supported bonds; moral obligation bonds; unfunded liabilities in state pension and health insurance programs; quasi-governmental bonds and statutory obligations. You can see a debt snapshot here.
- Maine taxpayers will pay almost $100 million in payments in FY 2012 just to keep up with our current bond
debt! Think about it… $100 million is currently being spent in just one fiscal year to keep up with debt already on the books. Imagine if that money could be put to work now, rather than paying for spending from the past. You can view the official state debt service summary here.
- The size of Maine’s debt dwarfs the entire size of our two year state budget. The current two-year state budget is $6.1 billion and our debt is more than $10 billion. That means if we completely shut state government down and put our entire two year budget on the current debt we still couldn’t pay it off.
- Moody’s recently revised Maine’s credit outlook from stable to negative, in part because of weakness in our state rainy day fund— which is the emergency reserve fund. Every dollar that we borrow and spend is a dollar that we can’t use to build our rainy day fund, fund other core government services or reduce the tax burden on Maine people.
- All told, looking at all of these costs, Maine taxpayers will make more than $500 million this year in debt payments for: general obligation bond debt service; transportation bond debt service; Maine state employees pension debt; state employees health insurance debt and hospital debt.
Now, the facts above are relevant to ANY new bond that goes out to voters, not just the R&D bond that will be considered tomorrow.
Ask yourself… do voters know that Bonds mean loans? Do voters really understand how much debt we are already in? Do they understand that the credit cards eventually have to be paid off?
As for the Governor’s veto, here are a few facts about that specific bond:
- While supporters of the R&D bond proposal have sold the additional $20 million in taxpayer debt as a boon to Maine’s private sector, the vast majority of the first three rounds of MTAF Grants were disbursed to the University of Maine system and non-profit organizations. See the first two rounds of grants here (pdf). See the third round of grants here (pdf).
- Some research into some MTAF grants show purchases such as sonar equipment, medical technology and other equipment and technology which may not even outlive the bond. Realistically, 10 years from now, Maine taxpayers may very well still be making principal and interest payments on equipment that has long since been discarded or sold at public auction.
Certainly, some research and development plays a role in the development of Maine’s private sector. However, burdening Maine taxpayers with questionable borrowing to grow and operate new and novel university and non-profit research projects at the expense of Maine taxpayers is not the proper way to use R&D to benefit Maine’s economy.
It is our position that lawmakers should veto LD 225 and set a goal to reform Maine’s R&D funding mechanism. The 126th Maine Legislature should seek to do two things:
- Work to fund critical research and development projects as a priority in the state budget. If these projects are as important as the supporters of the R&D bond say they are, they should demonstrate their value to legislators on the Appropriations Committee and they should be given a place in the Maine state budget – not just as questionable long term debt on the backs of Maine taxpayers.
- Work to reform the Maine R & D framework to focus more on specific private sector goals and results not the current “welfare for researchers” approach that appears to focus on growing the Maine government & non-profit research industry with regard to private sector growth as an afterthought.
Please go here now, contact your legislators and urge them to hold off on this bond proposal.
