AUGUSTA — Gov. Paul LePage wants to use unspent education funding and savings in an account for state employees’ health insurance to replace $21 million that the Legislature removed recently from the state’s rainy day fund.
Specifics are still emerging, but Democratic leaders said Wednesday that LePage’s finance chief had briefed them about the governor’s bill, and they expressed no immediate opposition.
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News of LePage’s proposal comes a day after the Republican governor blasted Democrats, who control the Legislature, for approving a bill that tapped the rainy day fund for some of the money needed to avoid a $40 million reduction in state aid to municipalities. The governor said he hopes lawmakers will back his idea for replenishing the fund, which is set aside to cover budget shortfalls or other unplanned expenses.
LePage has said what’s left in the fund is only enough to operate state government for three days. He said credit rating agencies have recommended the fund be large enough to run government for 15 days.
LePage responded to the Legislature’s vote by suspending $33 million in state issued bonds for transportation and infrastructure projects, arguing that the fund’s smaller balance could lead to a downgrade in the state’s credit rating, which would increase the cost of issuing bonds.
The governor has been under pressure to release the bonds so the projects they would fund, including $17 million for transportation projects and port facilities, can go forward. Some contractors and industry groups that would benefit from those projects have long supported LePage even though he froze voter-approved bonds for the first three years of his term.
Last year, construction industry employees supported the governor’s proposed $100 million transportation bond, a proposal LePage fast-tracked so funding was available for the upcoming construction season.
The industry has not publicly criticized the governor’s decision to suspend $33 million of that bond. However, LePage acknowledged in a news conference Tuesday that he had several meetings with industry representatives over the issue and told them to urge Democrats to pass his bill.
A spokesman for the Associated General Contractors of Maine did not respond to a request for comment.
The education funds LePage wants to tap – known as unencumbered carried balances – are among millions of dollars in state agency spending accounts that are carried forward each budget year. According to a document from the Legislature’s budget office, the Department of Education is carrying a $13.5 million unencumbered balance.
That money is classified as general purpose aid for local school districts, but the funds are not distributed under the state’s school funding formula. Historically, the funding has been earmarked for other purposes, such as special education for students who have become wards of the state.
It’s unclear how much of the $13.5 million the governor’s bill would take to replenish the rainy day fund. The governor’s spokeswoman, Adrienne Bennett, said Wednesday that more details would be made public when the bill is printed.
Senate President Justin Alfond, D-Portland, said he was glad that the governor had submitted the proposal.
“He has created a real mess, a real problem for projects across the state of Maine,” Alfond said. “Some of the projects start in weeks and he decided once again to break a promise to Maine voters. I’m glad that he’s feeling the heat. He should. . . . A business leader does not create uncertainty.”
Steve Mistler can be contacted at 791-6345 or at:
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