Augusta – Maine State Treasurer Bruce Poliquin reported that Moody’s Investors Service has affirmed the State’s Aa2 credit rating, and has revised its outlook to negative from stable. During the past several months, the Office of the State Treasurer has led a team of state government officials in discussions with the national rating agencies to update Maine’s credit rating.
During the late spring of each year, Maine state government typically borrows money by selling bonds to investors in order to fund capital projects such as road and bridge construction and repair. In preparation for the bond sale, the State seeks credit updates from the rating agencies. On May 31, the Office of the State Treasurer is planning to sell $55 million of general obligation bonds that were approved by the Legislature and Maine voters during past years. The interest and principal payments to bondholders are secured by the full faith and credit of the State. There is approximately $490 million of outstanding Maine general obligation debt.
In affirming its Aa2 credit rating, Moody’s cited Maine’s credit strengths including its manageable general obligation debt level; rapid 10-year pay back of such borrowing; gradually increasing tax revenues; strong internally managed Treasurer’s Cash Pool; and recent reform to its public pension plan for teachers and state employees that reduced future annual payments from the State’s General Fund.
Moody’s change to negative outlook reflects Maine’s recurring challenges for the Department of Health and Human Services (DHHS) spending primarily for its Medicaid (Mainecare) program; modest Budget Stabilization Fund (rainy day fund) balance; negative General Fund unassigned balance; and slower than average economic recovery – all of which strains the State’s financial liquidity position.
Treasurer Poliquin commented, “I’m pleased that Moody’s Investors Service has affirmed Maine’s solid Aa2 credit rating. This rating will continue to give investors confidence in the quality and security of our general obligation bonds. Our Office anticipates strong demand at the May 31 bond sale.”
The Treasurer further commented, “I appreciate the helpful guidance from Moody’s as Maine continuously strives to improve its credit rating. I note that Moody’s recognized the positive financial impact of state government eliminating $1.7 billion of our unfunded public pension liability last year. This year, the rating agency acknowledges the long-term financial health of our ongoing initiative to right-size our Medicaid program.”
The LePage Administration is committed to creating a business-friendly environment to attract capital investment and private sector jobs. This goal of long-term prosperity for Maine citizens is based on restraining state government spending; reforming public entitlements while maintaining important safety nets based on national averages; addressing long-term financial liabilities; lowering energy costs and health insurance premiums; streamlining business regulations; and investing in public education and infrastructure.
And they thought the Governor was joking. At the recent Piscataquis “Capital for a Day”, Governor LePage and Treasurer Poliquin both explained the dire fiscal picture they found painted on the books of the accounts in Augusta. They revealed to us that one of the first hurdles for the duo to overcome was convincing the S&P not to downgrade the credit rating of the State of Maine, which they had learned was imminent. Those of the “People are Merely Percentage Points” ers crowd scoffed at this revelation. It was unthinkable that we would receive a credit downgrade. Just scare tactics, stuff and nonsense.
Yes, thankfully the strength of leadership shown by the Governor and the Treasurer has saved Maine from such an embarrassment; in fact, a recent listing of the worst States to do business did not even mention the State of Maine. It is quite a turnaround in seven months to go from a “top of the list regular” to a “no show”. There is some recognition we’d rather not have.
Not so good though for the President and his merry band of obstructionists. While the “Hope and Change messiah” has yet to lower the sea level, he has succeeded in lowering our credit rating for the first time in the history of this great Nation. It was simple really. Standard and Poor’s wanted 4 trillion in deficit reduction. Paul Ryan and the Republicans wanted 4 trillion in spending cuts.
Enter Harry Reid. Nevada must be so proud. Smugly preening his arrogance before any microphone and camera he could find, Harry, no he’s not a Prince, promised that he would kill such a plan in the Senate. He did. Nevada must be so proud.
The President and the Senate President balked and stonewalled until they were forced into a desperate last minute anemic $2.4 trillion compromise that still raised the debt ceiling. The S&P was not bluffing. They lowered the credit rating of the United States for the first time in its history. They have also warned in no uncertain terms that if remaining cuts are not found to reach the $4 trillion mark, where have we heard that before, they will downgrade our credit rating once again.
So the unthinkable has happened. This begs the question- is Washington fixable? I think not. As we watch all the posturing, playacting and nonsensical behavior, it becomes more apparent the Federal government is a delinquent who is completely out of control beyond the reaches of reason. Our Governor calls their actions “antics”. Treasure Poliquin aptly calls them “poison”. The restoration of this great nation to its once proud glory will not come through the Federal government. We the people must look to our several States and local Counties to apply pressure upon our state officials to be fiscally prudent in their approach to governing. As we strengthen the might of our States from the Counties up and wean them from their dependence upon the Federal government, we will find that the pathetic behavior of our Federal officials will have much less the detrimental effect on our lives. Perhaps if those in Washington come to realize that they have thought of themselves more highly than they ought, they may start to behave better.