Bonds

Maine governor’s budget proposal seeks debt-free capital funding

Maine Gov. Janet Mills’ proposed biennial budget for fiscal years 2024-2025 seeks to continue a public infrastructure overhaul started in her first term without raising taxes or touching reserve accounts.

Instead, it frees up billions in new infrastructure spending by taking advantage of the state’s unexpectedly high estimated revenue of $10.5 billion in addition to $1 billion in federal support from the Infrastructure Investment and Jobs Act to improve the state’s transportation infrastructure.

“If we want to build a stronger, more prosperous state where opportunity is available to all, then we must invest in the infrastructure that supports our greatest asset: the people of Maine,” Mills said in a press release. “This budget proposal aims to strengthen what Maine people rely on every day to succeed, all while not raising taxes, living within our means, and protecting us against the possibility of a recession.”

“We must invest in the infrastructure that supports our greatest asset: the people of Maine,” Gov. Janet Mills, shown in 2019, said when she proposed her budget for fiscal 2024 and 2025.

Mills, a Democrat, was reelected in November, winning a second term by a comfortable margin against her Republican predecessor, Paul LePage. Democrats control both houses of the state legislature.

Mills’ plan would allocate $400 million to Maine’s Department of Transportation.

Maine’s DOT is responsible for nearly 9,000 miles of highway, 2,700 bridges and 588 miles of railroad track and identified over 2,000 individual projects in a three-year capital plan published in January.

That plan includes $80 million in spending on bridge construction and repair, $42 million for rail line upgrades, and another $43 million to be distributed to municipalities for road improvements. 

The capital plan’s priciest allocation is $80 million set aside for its obligations on around $186 million in debt associated with development grant bonds issued for capital improvements.

In October Moody’s Investors Service gave an A2 rating to that debt, issued by the Maine Municipal Bond Bank on behalf of the Maine DOT, citing strong reserves, and large pledges of federal aid.

The rating agency assigns its Aa2 rating with stable outlook to Maine’s total $589.7 million of outstanding GO bond debt, citing the state’s “stable economy, strong financial position”and “adherence to governance best practices that will enable the state to maintain budgetary balance” when it affirmed the rating in June.

S&P Global ratings assigns its AA rating to Maine GO bonds, with a stable outlook.

Mills’ budget proposal calls for no new debt or tax increases.

It also allocated funds to maintain public programs started during Mills’ first term, including free college offerings and affordable housing construction.

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