Fitch lowers Maine bond rating, cites budget gaps

Published on NewsOK Modified: January 23, 2013 at 4:31 pm •  Published: January 23, 2013
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"We can start by issuing the bonds that voters approved in June 2011 and November 2012," Douglass said. "The projects voters approved will create jobs and provide the foundation for a better economy."

Republican Gov. Paul LePage has been reluctant to issue voter-approved bonds, saying the state's financial situation must improve first. But he has recently promised to release $105 million in bonds if his plan to pay a state Medicaid debt to hospitals approaching $500 million is approved.

LePage has also proposed $100 million in government facilities bonds to build a replacement for the Maine Correctional Center in Windham.

The governor had no immediate response to the Fitch downgrading. But other Republican leaders said they were disappointed with Democrats' "hyper-partisan responses" to the downgrading.

House GOP Leader Ken Fredette, of Newport, said the Fitch report noted the administration's "positive reforms" such as pension reform, low debt levels and long-term structural savings, while increased costs in Medicaid and other programs the state can no longer afford are products of past Democratic leadership.

A Democratic leader said LePage's pending $6.3 billion, two-year budget is a big part of the fiscal problem.

"Governor LePage's current approach to the budget and revenues needs to be more collaborative and less like the obstructionist approach of Republicans in Washington," said House Speaker Mark Eves, of North Berwick.

Among other things, the budget seeks to suspend revenue sharing to towns and cities for two years and have school districts pay a portion of teacher retirements instead of the state paying it all.

Administration officials have identified as major budget challenges a loss of federal stimulus funds and rising Medicaid obligations.