Maine’s Towering Debt
Read the full report | Maine is drowning in a sea of debt.
Much has been made of the budget shortfalls that have plagued the state for years, but Maine people have heard very little about the state?s growing addiction to borrow-ing. Consider the following:
? While voters have approved bonded debt in excess of $500 million, that is but a fraction of Maine?s total debt, which adds up to a staggering $11.5 billion.
? The largest single component of Maine’s debt is what is known as “moral obligation” debt, which is bor-rowing done without voter approval by entities such as the Maine Municipal Bond Bank, the Maine State Hous-ing Authority, and the Finance Authority of Maine. Maine has $4.2 billion of such debt.
? The state has pension obligations totaling almost $4 billion, as well as obligations for health care coverage for retired state employees, teachers and legislators. The unfunded liability for the health care benefits the state has promised these groups is estimated to be more than $2.2 billion.
? While voter approval is required for General Obli-gation bonds, the state borrows money without voter approval through an entity known as the Government Facilities Authority (GFA). The GFA has been borrow-ing money for years without putting it before voters, and has a total indebtedness today of nearly $175 million.
? Maine voters typically approve highway bonds, but that doesn?t stop the state from borrowing additional funding for road construction. The state borrows for highway projects though the TRANSCAP program, and uses GARVEE bonds to borrow against future funding from the federal government. Neither one of these bor-rowing programs require voter approval.
? The cost of servicing Maine’s debt continues to rise. In FY 2005, the state?s annual debt service payments totaled more than $92 million. For the Fiscal Year be-ginning this summer, however, the state’s debt service payments are budgeted to exceed $127 million, an in-crease of $35 million in only 6 years.